No More Mr Nice Guy

By Molly Schwartz, cross-asset macro strategist at Rabobank

The euro took a hit yesterday, depreciating around 1.3% against USD for the worst intraday performance in two months. Meanwhile, USD had its best day since early May as the DXY Index climbed by more than 1.0%. These moves come as an extension of the trade deal announcements Trump made over the weekend.

The main headline was the “energy strategist, Florence Schmit, has called into question the plausibility of this promise, citing that “the EU would need to import roughly 67% of its energy needs from the US,” and this is without even taking to account European competition with Asian and Middle Eastern buyers.

However, not all are thrilled with this trade deal. Some German industry leaders have expressed concerns. When headlines and tariff rates are constantly changing, so does sentiment. Prior to Trump’s inauguration, economists were talking about “worst case scenarios” that included horrific outcomes like a 5% universal tariff, and 15% on Chinese goods. After witnessing 145% tariffs on China and Liberation Day “reciprocal tariffs,” it’s easy to shrug off the current developments. But the actual tariff levels still matter. According to conversation with Prime Minister Starmer, Trump said that he was “going to make a new deadline of about 10, 10 or 12 days from today,” which suggests that we could see the new deadline sometime during the tail-end of next week. The change in timeline, however, appears to be less of an effective push to get Putin to end the war, and rather a resignation, stating that he “already knows the answer.” Given our perceived inefficacy of the sanctions threats, coupled with a lack of progress from Putin on coming to a ceasefire agreement, it’s likely that the answer is “no.”

While Trump is playing the tough guy, we still question the efficacy of sanctions on buyers at all. The last time we spoke of this deal, we quoted our other energy strategist, Joe DeLaura, who said that “sanctions are only as good as the enforcement and mechanisms employed.” At the end of the day, these sanctions are unlikely to impact the flow of oil and energy markets were resistant, closing near Friday’s highs.

In tariff talk: Trump was asked about “when US tariffs on UK steel imports would come down to zero from 25%,” to which Trump replied “[w]e’re going to know pretty soon.” Yesterday, China and the US also sent trade representatives to Tyler Durden Tue, 07/29/2025 – 09:50

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