
European spending drops as trade tensions hit consumer wallets
According to first estimates released by Eurostat on Monday, the seasonally adjusted volume of retail trade decreased by 0.7% in the eurozone and by 0.8% across the EU in May, compared to April.
The decline aligns with economists' forecasts but marks the sharpest drop since August 2023.
The setback follows a modest rebound in April, when sales rose by 0.3% in the eurozone and by 0.8% in the wider European Union.
On an annual basis, eurozone retail sales growth slowed from 2.7% in April to just 1.8% in May — the weakest expansion since July 2024.
Sector breakdown and national trends
Across the eurozone, all major retail sectors experienced contraction. Sales of food, drinks and tobacco fell by 0.7%, while non-food products — excluding automotive fuel — declined by 0.6%.
Automotive fuel sales dropped the most, falling by 1.3% in specialised stores.
In the broader EU, the declines were similarly spread, with food and beverage sales down 0.8%, non-food products dropping by 0.7%, and automotive fuel dipping 1.2%.
Among EU member states, the most severe monthly contractions were seen in Sweden (-4.6%), Belgium (-2.5%) and Estonia (-2.2%). Meanwhile, Portugal (+2.1%), Bulgaria (+2.0%) and Cyprus (+1.0%) posted the strongest increases.
Markets stay cautious as investors watch US trade moves
European equity markets remained largely flat on Monday.
The blue-chip Euro STOXX 50 hovered near 5,300 points, while the broader STOXX 600 was unchanged at 541, as investors awaited clarity on the direction of US trade policy.
The euro edged down 0.3% to $1.1730, while yields on 10-year German Bunds held steady at around 2.57%.
President Donald Trump is expected to issue a new wave of tariff warning letters later on Monday, targeting countries with trade surpluses with the United States.
While the list of recipients remains undisclosed, Commerce Secretary Howard Lutnick confirmed that the "Liberation Day" tariff package originally scheduled for 9 July would now take effect on 1 August.
Trump's administration had previously imposed a 20% import tax on EU-manufactured goods in April, but quickly reduced the rate to 10% as financial markets plummeted.
However, a separate deadline to reach an agreement with the European Union before tariffs rise as high as 50% has now been set for Wednesday.
So far, only China, the United Kingdom and Vietnam have managed to secure temporary exemptions through deals with Washington.
Trump has warned that any country aligning with the 'anti-American policies' of the BRICS bloc will face an additional 10% tariff — with no exceptions.
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Euronews
43 minutes ago
- Euronews
Trump sends tariff letters, placing 25% duty on Japan and South Korea
President Donald Trump on Monday announced a 25% tax on goods imported from Japan and South Korea, as well as new tariff rates on a dozen other nations that would go into effect on 1 August. Trump posted letters on Truth Social that were addressed to the leaders of the various countries. The letters warned them not to retaliate by increasing their own import taxes, or else the Trump administration would further increase tariffs. 'If for any reason you decide to raise your Tariffs, then, whatever the number you choose to raise them by, will be added onto the 25% that we charge,' Trump wrote in the letters to Japanese Prime Minister Shigeru Ishiba and South Korean President Lee Jae Myung. The letters were not the final word from Trump on tariffs, so much as another episode in a global economic drama in which he has placed himself at the centre. His moves have raised fears that economic growth will slow to a trickle, if not make the US and other nations more vulnerable to a recession. But Trump is confident that tariffs are necessary to bring back domestic manufacturing and fund the tax cuts he signed into law last Friday. Despite his threats, the president showed a willingness to negotiate, a tactic that suggests the drama and uncertainty will continue. 'It's all done," Trump told reporters Monday. 'I told you we'll make some deals, but for the most part we're going to send a letter.' South Korea's Trade Ministry said early on Tuesday that it would accelerate negotiations with the United States to achieve a mutually beneficial deal before the 25% tax on its exports goes into effect. Imports from Myanmar and Laos would be taxed at 40%, Cambodia and Thailand at 36%, Serbia and Bangladesh at 35%, Indonesia at 32%, South Africa and Bosnia and Herzegovina at 30% and Kazakhstan, Malaysia and Tunisia at 25%. Trump placed the word 'only' before revealing the rate in his letters to the foreign leaders, implying that he was being generous with his tariffs. But the letters generally followed a standard format, so much so that the one to Bosnia and Herzegovina initially addressed its leader, Željka Cvijanović, as 'Mr. President', although she is a woman. Trump later posted a corrected letter. Trade talks have yet to deliver several deals White House press secretary Karoline Leavitt said that Trump, by setting the rates himself, was creating 'tailor-made trade plans for each and every country on this planet". Following a now well-worn pattern, Trump plans to continue sharing the letters sent to his counterparts on social media and then mailing them the documents, a stark departure from the more formal practices of all his predecessors when negotiating trade agreements. The letters are not agreed-to settlements but Trump's own choice on rates, a sign that the closed-door talks with foreign delegations failed to produce satisfactory results for either side. Wendy Cutler, vice president of the Asia Society Policy Institute who formerly worked in the office of the US Trade Representative, said the tariff hikes on Japan and South Korea were 'unfortunate'. 'Both have been close partners on economic security matters and have a lot to offer the United States on priority matters like shipbuilding, semiconductors, critical minerals and energy cooperation,' Cutler said. Trump still has outstanding differences on trade with the European Union and India, among other trading partners. Tougher talks with China, where exports sent to the US are being taxed at 55%, are more of a long-term prospect. The office of South African President Cyril Ramaphosa said in a statement that the tariff rates announced by Trump mischaracterised the trade relationship with the US. He said that his country would nonetheless 'continue with its diplomatic efforts towards a more balanced and mutually beneficial trade relationship with the United States" after having proposed a trade framework on 20 May. Higher tariffs prompt market worries, more uncertainty ahead The S&P 500 stock index was down 0.8% in Monday trading, while the interest charged on 10-year US Treasury notes increased to nearly 4.39%, a figure that could translate into elevated rates for mortgages and auto loans. Trump has declared an economic emergency to unilaterally impose the taxes, suggesting they are remedies for past trade deficits even though many US consumers have come to value autos, electronics and other goods from Japan and South Korea. The constitution grants Congress the power to levy tariffs under normal circumstances, though tariffs can also result from executive branch investigations if they are imposed on national security grounds. Trump's ability to impose tariffs through an economic emergency is under legal challenge, with the administration appealing a May ruling by the US Court of International Trade that said the president exceeded his authority. It's unclear what he gains strategically against China — another stated reason for the tariffs — by challenging two crucial partners in Asia, Japan and South Korea, that could counter China's economic heft. 'These tariffs may be modified, upward or downward, depending on our relationship with your Country,' Trump wrote in both letters. Because the new tariff rates go into effect in roughly three weeks, Trump is setting up a period of possibly tempestuous talks among the US and its trade partners to reach new frameworks. 'I don't see a huge escalation or a walk back — it's just more of the same," said Scott Lincicome, a vice president at the Cato Institute, a libertarian think tank. Trump initially roiled the financial markets by announcing tariff rates on dozens of countries, including 24% on Japan and 25% on South Korea. In order to calm the markets, Trump unveiled a 90-day negotiating period during which goods from most countries were taxed at a baseline 10%. So far, the rates in the letters sent by Trump either match his 2 April tariffs or are generally close to them. The 90-day negotiating period technically ends Wednesday, even as multiple administration officials suggested the three-week period before implementation is akin to overtime for additional talks that could change the rates. Trump signed an executive order Monday to delay the official tariff increases until 1 August. Congressionally approved trade agreements historically have sometimes taken years to negotiate because of the complexity. Administration officials have said Trump is relying on tariff revenues to help offset the tax cuts he signed into law on 4 July, a move that could shift a greater share of the federal tax burden onto the middle class and poor as importers would likely pass along much of the cost of the tariffs. Trump is pressuring major retailers such as Walmart to absorb the higher costs, instead of increasing prices, which could intensify inflation. Josh Lipsky, chair of international economics at The Atlantic Council, said a three-week delay in imposing the tariffs was unlikely sufficient for meaningful talks to take place. 'I take it as a signal that he is serious about most of these tariffs and it's not all a negotiating posture," Lipsky said. Trade gaps persist, more tariff hikes are possible Trump's team promised 90 deals in 90 days, but his negotiations so far have produced only two trade frameworks. His outline of a deal with Vietnam was clearly designed to box out China from routing its America-bound goods through that country, by doubling the 20% tariff charged on Vietnamese imports on anything traded transnationally. The quotas in the signed United Kingdom framework would spare that nation from the higher tariff rates being charged on steel, aluminium and autos, though British goods would generally face a 10% tariff. The United States ran a $69.4bn (€59.1bn) trade imbalance in goods with Japan in 2024 and a $66bn (€56.2bn) imbalance with South Korea, according to the Census Bureau. The trade deficits are the differences between what the US exports to a country relative to what it imports. According to Trump's letters, autos would be tariffed separately at the standard 25% worldwide, while steel and aluminium imports would be taxed at 50%. This is not the first time Trump has tangled with Japan and South Korea on trade — and the new tariffs suggest his past deals made during his first term failed to deliver on his administration's own hype. In 2018, during Trump's first term, his administration celebrated a revamped trade agreement with South Korea as a major win. And in 2019, Trump signed a limited agreement with Japan on agricultural products and digital trade that at the time he called a 'huge victory for America's farmers, ranchers and growers". Trump has also said on social media that countries aligned with the policy goals of BRICS, an organisation composed of Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates, would face additional tariffs of 10%.


France 24
an hour ago
- France 24
Bulgaria to get final green light to adopt euro in 2026
The European Commission last month said The EU's poorest country had fulfilled the strict conditions to adopt the euro, while the European Central Bank (ECB) also gave a positive opinion. Bulgaria's switch from the lev to the euro next year will come 19 years after the country of 6.4 million people joined the European Union. Bulgaria's journey to joining the eurozone has had a stormy political backdrop with seven elections in three years -- the last in October 2024. Its bid will be formally approved by EU finance ministers meeting in Brussels once they adopt the legal texts necessary for the historic move. But many Bulgarians are against switching to the euro over worries it will lead to a rise in the cost of living. Protests took place before and after the commission's decision, while surveys in the lead up showed nearly half of those asked are opposed to adopting the euro. Proponents in Bulgaria believe the move will help improve Bulgaria's economy and citizens' lives. The green light comes as the euro has been gaining in value against the US dollar as President Donald Trump's protectionist trade policies shake trust in the US currency. ECB chief Christine Lagarde in May made a pitch for the euro as a global reserve currency, saying increasing the currency's international role would offer advantages for the EU including lower borrowing costs for the bloc's member states. Euro club gets bigger Only 12 countries were part of the single currency area -- including France, Germany, Italy, Spain, and Greece -- when the first euro bills and coins were rolled out on January 1, 2002. It gradually widened with Slovenia joining in 2007, Cyprus and Malta in 2008, Slovakia in 2009, Estonia in 2011, Latvia in 2014 then Lithuania in 2015. Croatia was the last country to join in 2023, bringing the total to 20. Bulgaria wanted to adopt the euro sooner but Brussels judged its inflation was too high to meet the necessary criteria. EU states that want to join the single currency must demonstrate that their economy has converged with other eurozone countries and that they have their finances under control. The conditions include holding inflation to no more than 1.5 percentage points higher than the rate of the three best-performing EU countries. When Brussels gave its backing in June, it said Bulgaria's average inflation rate during the 12 months to April 2025 was 2.7 percent, just below the reference value. © 2025 AFP


France 24
an hour ago
- France 24
Major garment producer Bangladesh seeks deal after 35% US tariff
Textile and garment production accounts for about 80 percent of exports in Bangladesh and the industry has been rebuilding after it was hit hard in a student-led revolution that toppled the government last year. "There is a hope for getting a reduced rate of tariffs as USTR (Office of the United States Trade Representative) sent another draft document for review," Commerce Secretary Mahbubur Rahman told AFP. Rahman said the South Asia nation's national security adviser and commerce adviser were "working on the issue" in the United States. Bangladesh exported $8.36 billion worth of goods to the United States in 2024, while imports from there amounted to $2.21 billion, according to the Bangladesh Bank and the National Board of Revenue. US clothing companies that source products from Bangladesh range from Fruit of the Loom to Levi Strauss to VF Corp -- whose brands include Vans, Timberland and The North Face. Trump hit Bangladesh with 37 percent tariffs in an April 2 announcement, but in a letter issued Tuesday, the US leader said it would now be 35 percent. That is more than double the 16 percent already placed on cotton products. Dhaka has proposed to buy Boeing planes and boost imports of US wheat, cotton and oil in a bid to reduce the trade deficit, which Trump has used as justification for imposing painful levies. Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), called it "a big challenge for the garment sector". "We had expected the tariff imposed on us to be between 10 to 20 percent," he said, adding he expected Dhaka's interim leader Muhammad Yunus to "raise the issue with the United States". Former BGMEA director Mohiuddin Rubel warned the impact as tariffs stand would be dire. "The new tariffs raise worries about job losses in Bangladesh as the US is its main export market," he said. © 2025 AFP