The Trial Balance is CFO.com’s weekly preview of stories, stats and events to help you prepare.
Part 1 — EU trade deal brings cost clarity without certainty
President Trump’s threat of 30% tariffs on European imports led to negotiations over the weekend that ended with a 15% U.S. tariff on most European goods, and a suspension of retaliatory tariffs by the EU. U.S.-based CFOs watching for the announcement of a new trade deal between the U.S. and European Union might breathe a cautious sigh of relief, but there’s a major disclaimer.
For CFOs at companies that rely on European suppliers, the new tariff will create challenges. Automakers are expected to face higher costs, with Mercedes-Benz warning of “significant increases” in vehicle pricing — despite producing 35% of the vehicles it sells in the U.S. at its plant in Tuscaloosa, Alabama. Fellow German automaker Volkswagen reported a €1.3 billion ($1.5 billion) hit to profits in the first half of the year due to prior tariff exposure.
But for U.S. companies exporting to Europe, the picture looks different. The EU agreed to zero tariffs on a range of “strategic” goods, including aircraft and aircraft parts, certain chemicals, semiconductor equipment, certain agricultural products and some natural resources. The deal also includes a $750 billion EU commitment to buy U.S. energy and $600 billion in additional EU investment in the U.S., though the origin and structure of that funding remain unclear.
European Commission President Ursula von der Leyen said negotiations would continue to expand the list of tariff-free goods, while both sides left steel and agriculture unresolved. Carsten Brzeski, global chief of macro at Dutch multinational banking and financial services firm ING, said the agreement is “unequal and unbalanced.” He also noted the lack of a written agreement and called it “the big caveat” to what otherwise provides short-term relief and “stability and predictability for companies on both sides.”
For CFOs, the takeaway is twofold: the threat of trade escalation may be off the table for now, but higher import costs are here to stay. The challenge now is measuring the true impact of these policies, and proactively adjusting pricing, sourcing and global strategy before it’s too late.
Part 2 — This week
Here’s a list of important market events slated for the week ahead.
Monday, July 28 — None scheduled.
Tuesday, July 29
- Advanced U.S. trade balance in goods, June
- Advanced retail inventories, June
- Advanced wholesale inventories, June
- Consumer confidence, July
- Job openings, June
Wednesday, July 30
Thursday, July 31
- Initial jobless claims, July 26
- PCE index, June
- Core PCE index, June
- Chicago Business Barometer (PMI), July
Friday, Aug. 1
- U.S. employment report, July
- U.S. unemployment rate, July
- S&P final U.S. manufacturing PMI, July
- ISM manufacturing, July
- Consumer sentiment (final), July
Part 3 — CFO media appearance of the week: Volkswagen CFO Arno Antlitz
Volkswagen CFO Arno Antlitz spoke to Bloomberg just days before the trade deal between the U.S. and Europe, talking about how the company remains under financial pressure from U.S. auto tariffs. While the reduction offers some relief, Antlitz emphasized the stakes remain high as the company recalibrates its U.S. strategy. “We need a good solution that fits both the needs of the American administration and the European automakers.”
With the Audi and Porsche brands under VW’s ownership particularly exposed to import costs, Antlitz said further U.S. investment is under consideration. “If we would invest into a factory for Audi in the U.S., that number would go up,” he said. When pressed on scale, he added, “[it’s] too early to give you a figure, but clearly north of where we are now.”
