Global stock markets hesitated on Friday after U.S. President Donald Trump said the chances of securing a trade deal with the European Union stood at “50‑50.”
Investors remained on edge, balancing optimism around potential negotiations with caution over looming tariff deadlines.
In remarks following a meeting with Federal Reserve Chair Jerome Powell, Trump also hinted that interest rate cuts may be in the works, saying markets were weighing both trade and monetary policy developments .
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“I would say that we have a 50/50 chance, maybe less than that, but a 50/50 chance of making a deal with the EU,” Trump told reporters at the White House.
As a result, the S&P 500 and Dow Jones saw modest gains, supported by strong Q2 corporate earnings, around 80% of S&P firms exceeded expectations—yet key stocks such as Tesla, GM, and Intel declined, with Intel falling 9% on weak forward guidance.
The outlook comes amid rising trade tensions. Trump upheld previous threats of steep tariffs, warning of a potential 30% levy on EU goods after an August 1 deadline if talks produce no deal. He also reiterated that tariffs on steel and aluminum could reach 50% if no agreement is secured, signaling firm resolve in negotiations—remarks that have unsettled markets in recent months.
European indices responded cautiously. Futures for major U.S. markets rose around 1%–1.4%, while Germany’s DAX gained about 1.5% and France’s CAC 40 advanced similarly on renewed optimism over trade talks with Brussels. However, previous tariff threats had inflicted heavier losses: past market reactions included a 3% drop in major European indices and sharp losses in U.S. futures earlier in the year
Analysts noted that investor sentiment reflects what some call the “TACO trade”—Trump Always Chickens Out. This belief that his tariff posturing may be largely tactical has helped buoy stock prices, even as underlying volatility remains elevated.
Major corporations are already feeling the fallout. Apple’s stock previously fell 3.5% after tariff threats, and automakers have been hit hard by potential higher duties on EU imports.
Although markets briefly rallied earlier in July following a U.S.–Japan trade deal, investor focus has now pivoted to EU negotiations and the looming August 1 deadline.
The EU is still forging ahead with contingency plans in case talks fail, with member states approving a 93 billion-euro ($109 billion) package of counter-tariffs.