Trump Says China Trade Deal ‘Very Close,’ Threatens EU With Higher Tariffs

Switzerland’s President Karin Keller-Sutter will personally lead negotiations with the U.S. over tariffs. (FABRICE COFFRINI/AFP via Getty Images)

President Donald Trump said the U.S. was “getting very close” to a deal with China, while also threatening to impose higher tariffs on the European Union as he gave several trade updates early Tuesday.

Trump said the U.S. was “getting along very well” with Beijing and that a deal was close, in an interview with CNBC.

But other trading partners were on the receiving end of warning shots from the president.

Trump said that if the EU doesn’t follow through on its investment commitments, the bloc will face tariffs of 35%, up from the 15% announced in a deal last month. The president has previously threatened 30% tariffs on the EU.

“They paid $600 billion and because of that I reduced their tariff from 30% down to 15%. That’s a gift, that’s not a loan,” he said in an interview with CNBC. “The details are $600 billion to invest in anything I want. The purpose was they’ve been ripping us for so many years that it’s time that they pay up. And they have to pay up,” he added.

Separately, Trump said he would hike levies on India—currently settled at 25%—because the country is buying Russian oil.

Swiss Timing

Swiss President Karin Keller-Sutter will fly to Washington, D.C. on Tuesday in a bid to lower tariffs on its goods in the nick of time. She is set to hold talks with U.S. officials, after President Donald Trump imposed a shock 39% tariff on the Alpine nation last week.

Switzerland’s Federal Department of Finance said in a statement that Keller-Sutter and a small delegation of officials would aim to “present a more attractive offer to the United States in a bid to lower the level of reciprocal tariffs for Swiss exports, taking U.S. concerns into account.”

Trump’s 39% tariff is set to take effect on Thursday, although the Swiss government has previously said that it would extend negotiations past that date if necessary. Switzerland’s main exports to the U.S. include pharmaceuticals and gold, both exempt from the higher rate, as well as luxury watches and chocolate.

Pantheon Macroeconomics economists Claus Vistesen and Melanie Debono said in a research note they now expect Switzerland to suffer a recession over the second half of this year because of the levies set by Trump. They also forecast that the Swiss National Bank will cut interest rates by a quarter point in September.

Zurich’s flagship Swiss Market Index climbed 0.5% on Tuesday, paring back its losses from the previous session. The Swiss franc slipped 0.25% against the dollar to $1.23.

U.S.-India Russian Oil Row Drags On

The U.S. and India remained in a trade deadlock after President Donald Trump’s threats of higher tariffs sparked a flare-up in tensions between two of the world’s largest economies.

Trump said in a Truth Social post Monday that he would be “substantially raising” levies on India over its purchasing of sanctioned Russian oil. It wasn’t clear if he planned to hike tariffs above the 25% rate that New Delhi is already facing.

India’s Ministry of External Affairs hit back with a statement calling its imports of Russian crude a “necessity,” adding that “the targeting of India is unjustified and unreasonable.” The country’s flagship Nifty 50 index slipped 0.5% on Monday, but was up 0.6% in early trading Tuesday.

Trump has already unveiled tariffs for most of the world’s largest economies, including Japan, the U.K., and the European Union. With just days to go until the Aug. 7 deadline when rates are set to snap higher, the stalemate with India is one remaining source of market uncertainty.

Diageo Meets Guidance, Flags Tariff Hit

Alcoholic drinks maker Diageo reported annual results that came in line with previous guidance on Tuesday, as it bids to show investors that it’s weathering the twin storms of tariffs and young people drinking less.

Shares in the company, which owns a portfolio of brands including Guinness and Don Julio, jumped 6.4% in early trading. London’s flagship FTSE 100 index was up 0.3%.

Diageo said in a statement that it expects to take a $200 million hit from tariffs and expects to be able to mitigate half of that. The company had previously forecast a $150 million impact.

Its guidance relies on the assumption that Trump sticks to his 10% tariffs on the U.K. and 15% levies on the European Union, and that imports of Mexican and Canadian spirits into the U.S. remain exempt from duties under the free-trade agreement between the three countries.

Write to George Glover at george.glover@dowjones.com