Trump Says China Deal Is ‘Very Close,’ Threatens the EU, Talks Tariffs on Semis

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.

Trump said the U.S. was “getting along very well” with Beijing and that a deal was close, in a Tuesday interview with CNBC where he shared multiple trade updates.

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 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 the interview. “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.

Semiconductor, Pharmaceutical Tariffs Coming

Trump said he would unveil tariff rates for semiconductor chips, which are excluded from the baseline tariffs, as soon as next week.

“We want them being made in the United States—and by the way, they’re being made in the United States,” he said, referring to a plan by Taiwan Semiconductor Manufacturing Co. to expand its operations in Arizona.

The president said he would set an “initially small tariff” on pharmaceuticals, but added that it would scale up to 150% within the next 12 to 18 months and to 250% after that, “because we want pharmaceuticals made in our country.”

Higher Rates for India Because of Russian Oil

Trump said again on Tuesday that he would hike levies on India—currently at 25%—because the country is buying Russian oil.

On Monday, the president said he would be “substantially raising” levies on India because it is purchasing sanctioned Russian oil.

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 Tuesday trading.

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 jumped 1.6% on Tuesday. The Swiss franc slipped 0.2% against the dollar to just under $1.24.

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 4.6 on Tuesday. London’s flagship FTSE 100 index was up 0.5%.

Diageo said 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