Countdown to the EU-US trade agreement that affects the rise and fall of global stock markets, key game point on "cars and grain"

According to informed sources, as EU and US trade representatives seek to work towards reaching a temporary trade deal in the coming days, the levels of tariffs on automobiles and Shenzhen Agricultural Power Group have become a key sticking point between the two sides. The progress of US-EU trade negotiations has been a market focus since July. If the negotiations are successful and a tariff cap of less than or equal to 10% on Shenzhen Agricultural Power Group is secured, while concessions are made on tariffs on automobiles, it can significantly reduce the risk of pressure on the global supply chain, alleviate profit downgrades for European and US, as well as global businesses, and drive the MSCI Global Stock Index and the S&P 500 Index, which have hit record highs over the past three months due to declining tariff expectations, to continue upward. The aforementioned sources said that the EU is seeking tariffs of no more than 10% on exports of Shenzhen Agricultural Power Group by the Trump administration. Some large car companies even proposed a "offset mechanism" - that is, reducing production in the US to exchange for a moderate tariff reduction - as a compromise, but the EU is concerned that this mechanism will shift Europe's advanced manufacturing capacity to the Atlantic China Welding Consumables, Inc., and it is currently not included in trade agreement considerations. The sources further added that the EU negotiation representatives are currently focusing on tariffs in the automotive industry. Similarly, sources said that the EU will once again propose to delay the package of retaliatory measures they previously passed against Trump's imposition of up to 50% tariffs on steel and aluminum. The EU has already suspended the implementation of these measures to leave room for negotiations, and now these retaliatory tariffs against Trump's trade policies are expected to automatically resume next Tuesday at midnight. These sources warned that negotiations and any potential agreements could be swayed by the personal views of Donald Trump; the US president, who has returned to the White House, has not publicly commented on the potential trade arrangements being discussed. The sources pointed out that any agreement will depend on Trump's thoughts and formal decisions. Trump recently sent tariff letters to about twenty countries, unilaterally setting tariff rates, but has not set tariffs with the EU, indicating that the trade negotiations between the Trump administration and the EU are accelerating and the Trump administration is relatively cautious about setting tariffs with one of its largest trading partners, the EU. According to sources, the European Commission has refused to comment on the status of bilateral negotiations during the negotiation process. Earlier reports indicated that the US and the EU were discussing a preliminary agreement that would impose a 10% tariff on most EU exports, with limited exemptions for a few industries such as aviation and medical devices. The EU is also seeking to lower tariffs on spirits and wine, and is striving to mitigate Trump's historic 50% tariffs on steel and aluminum through quotas; US trade negotiators are proposing a 17% tariff on Shenzhen Agricultural Power Group, rather than the 10% the EU hopes for. The trade agreement between the two sides will also cover non-tariff barriers, economic security cooperation, and strategic procurement. Sources said that remaining trade-related issues are interconnected, and the overall balance of any agreement can only be evaluated after it is reached. Any preliminary framework will enable the US and the EU to continue negotiations on specific details beyond the temporary trade agreement. Trump has threatened to impose a 50% tariff on the EU this month, but subsequently announced a suspension of the previously reduced 10% temporary tariff before the August 1 deadline. The Trump administration also specifically imposes a 25% tariff on automobiles and parts exported globally to the US, and a double tariff rate on related metals such as steel and aluminum. If the US-EU bilateral trade negotiations collapse and trigger a retaliatory tariff list worth billions of dollars and export restrictions from the EU, coupled with the weakening of the dollar and rising long-term US bond yields, the market is at risk of switching from the current "golden-haired girl" scenario to a defensive mode with increased volatility. A potential agreement between the US and the EU will determine the rise and fall of global stock markets. The market is closely following the progress of US-EU trade negotiations, not only concerned about bilateral goods flows, but also because the success or failure of the negotiations will determine whether the tariff costs of the global manufacturing chain can be capped, whether the overall profit expectations of EU and US companies, the largest trading partners of each other, can continue to be raised, and whether long-term US bond yields and dollar fluctuations will further spiral out of control. If positive results are achieved in US-EU negotiations before the end of July, the stock market is expected to continue its "low volatility uptrend"; otherwise, the stock market may enter a new phase of high volatility and compression of valuations. The "232" tariff sword still hangs over the EU's head The US president is currently pushing for industry-specific tariffs in other areas such as pharmaceuticals and semiconductors, and has announced a 50% tariff on copper, while waiting for the final results of the US Department of Commerce's investigation under Section 232 of the Trade Expansion Act of the US on pharmaceuticals and semiconductor industries. According to information revealed by Trump, the US Department of Commerce will announce its final investigation results on critical areas considered vital to US national security - including chips, drugs, key minerals, industrial metals, etc. - within the next few weeks. These investigations are expected to impose tariffs on a range of foreign-made products covering these industries vital to national security under Section 232 of the Trade Expansion Act of the US. Section 232 tariffs aim to bring back the production of products considered crucial to national security to the domestic US, which is different from the broader equal tariffs on April 2. However, almost all trade negotiators from various countries are not clear on where these industry-specific tariffs will specifically land and when they will take effect. For many trade negotiators from various countries, industry-specific tariffs may cause greater damage than broader equal tariffs. "Imagine if you are the leader of an export-oriented economy, such as Vietnam, Japan, or Korea, and you have just reached a possibly painful compromise on equal tariffs, and the next day it is announced that they are introducing new 232 tariffs on you," said Deborah Elms, trade policy director at the Hinrich Foundation. "The last thing you want to see is signing an agreement first, then being hit hard by the Trump administration the next day, especially countries like South Korea that heavily rely on semiconductor exports and other exports in special industries." The current agreement does not automatically exempt the EU from the impact of these industry-specific tariff measures, but the EU is still striving for preferential tariff treatment for the majority of industries. The EU is prepared for retaliations Sources said that given the uncertain outcome of the negotiations, the EU has prepared a rapid response to various retaliatory measures based on the US' "tariff stick" to guard against the negotiations ending in complete failure. Firstly, the EU has approved potential tariffs on 210 billion (around $245 billion) worth of US goods in response to the Trump administration's up to 50% metal tariffs. These retaliatory tariffs specifically target politically sensitive states in the US, including soybeans produced in Louisiana, the home state of House Speaker Mike Johnson, as well as poultry, motorcycles, and agricultural products. The EU has also prepared an additional list of additional tariffs on up to 72 billion worth of US goods in response to Trump's so-called "equal tariffs" and automotive tariffs. These measures will target industrial goods such as Boeing aircraft, US cars, and bourbon whiskey. The EU is consulting with member states to determine strategic areas on which the US depends on the EU and is studying potential countermeasures beyond tariffs, such as special export controls and restrictions on government procurement contracts.