An Aug. 1 deadline looms for the US and EU to reach an agreement on a trade deal, but President Trump’s recent threat of a 30% tariff rate on products from The Land Of No Air Conditioners appears to have escalated the already tense ongoing negotiations.

Multiple reports indicate this has emboldened the EU to more strongly consider retaliating against the US with a never-before-used measure: kindness the Anti-Coercion Instrument.

Is that code for a baseball bat? No. It’s a legal tool that allows the EU’s bloc of 27 countries to impose new taxes on US tech companies, reduce investments in US firms on EU soil, and prevent US companies from bidding on public European contracts. And that’s in addition to imposing its own tariffs.

Cars, drugs, and booze

The EU and the US have the world’s largest bilateral trade agreement. Per the European Council, the two entities were responsible for $1.96 trillion in trade last year. So, what would an all-out trade war mean?

In the EU:

• Germany would be hit the hardest: It sent $174.5 billion worth of goods to the US last year, the most of any EU country, with much of it from the auto and pharmaceutical industries.
• The medical sector as a whole is particularly vulnerable. Denmark is home to Novo Nordisk, the maker of Ozempic, and drugmaker Sanofi is based in France. Pharmaceuticals are also the biggest export to the US from Ireland, which hosts manufacturing plants for US drug companies Pfizer and Johnson & Johnson.
• Wine and spirit exports from France and Italy have been a contentious point in the negotiations going as far back as March.

As for how the EU might go after the US, policymakers could target $100 billion worth of goods with a focus on red states—the places with conservative leaders that helped vote Trump into office.

Bottom line: US Commerce Secretary Howard Lutnick said he expects a deal to get done. But he also said that negotiations can continue beyond Aug. 1, even if the tariffs go into effect.—DL

Stellantis says it will lose $2.7b, partly because of tariffs. Jeeps may be all-terrain vehicles, but the company that makes them is struggling in the current market landscape. Yesterday, the automaker announced a surprise loss for the first half of the year, fueled in part by a $350 million hit from new US tariffs and costly turnaround efforts at the company. A 25% tariff on imported cars and auto parts took effect on April 2, and the company said its shipments to North America declined by 25% in the second quarter compared to the same period last year. A company exec said Stellantis would likely have to raise car prices soon, noting “tariffs are inherently inflationary.” It was the car company’s first earnings report released under its new CEO, who took over last month.

Judge questions whether slashing Harvard’s funding is constitutional. Lawyers for Harvard University and the Trump administration argued in a federal court yesterday in the school’s lawsuit challenging the government’s decision to strip more than $2 billion in funding from the school over what it claims was an inadequate response to antisemitism on campus. Harvard asserted that its constitutional rights were being violated, while the government’s lawyer (a Harvard grad) said the university had violated its contracts, so the government could nix them. But the judge expressed skepticism, saying, “It seems to be your idea that you can terminate a contract even if the basis for termination is a constitutional violation.”

Cosby Show star Malcolm-Jamal Warner dies at age 54. The actor reportedly drowned on Sunday after getting caught in a strong current while swimming in Costa Rica on a family trip. He was best known for his role as Bill Cosby’s son Theo Huxtable as a teenager on the iconic ’80s show, though Warner told the AP in 2015 that the show’s legacy had been “tarnished” by the subsequent sexual assault allegations against Cosby. Warner continued to work steadily after the show’s eight-year run and went on to star in other sitcoms, such as Malcolm & Eddie and Read Between The Lines. In his personal life, he had a wife and daughter, but chose to keep their identities private.—AR

The world’s biggest prediction market is getting out of its hometown banishment. Polymarket is buying a US-listed derivatives exchange, giving it a legal pathway to return to the US market, Bloomberg reported yesterday.

Cost of (re)entry: Polymarket will pay $112 million to buy QCX, a small exchange that just got approved by US regulators earlier this month, per Bloomberg. And while Polymarket has been barred from supporting US-based bets since 2022 because the crypto-based platform was unregistered, that hasn’t stopped the marketplace from schmoozing Uncle Sam:

• Polymarket spent almost $1 million on Facebook and Instagram ads targeting US users last fall, around the same time it became a global casino for election wagers, Sportico reports.
• This year, Polymarket spent $90,000 to hire its first lobbyist, per OpenSecrets. It engaged David Urban, a former advisor to President Trump, to sell lawmakers on “the value of prediction markets,” a company spokesperson told Politico.

Cleared for landing: Last week, in the latest reversal of Biden-era actions on digital assets, Trump-appointed officials ended two investigations that began in 2024 into whether Polymarket violated its agreement to suspend US-based bets.

Zoom out: Sportsbooks like DraftKings are likely dreading the return of Polymarket because of how much Kalshi, a US-approved prediction market, has already disrupted their business. The gambling industry also fears that Trump’s nominee for the regulatory body overseeing prediction markets—who is a current Kalshi board member—won’t help their cause.—ML

China is the envy of beavers worldwide: A gargantuan hydroelectric power dam on a steep, sloping section of the Yarlung Zangbo River in Tibet is officially under construction, Premier Li Qiang said over the weekend.

The new dam’s projected annual capacity of 300 billion kWh is equivalent to Britain’s entire power consumption in 2024, and nearly triple the output of the Three Gorges Dam, the world’s current largest dam.

Economic turbocharge

Chinese markets rallied on the announcement. The $167 billion megaproject is expected to stimulate China’s slumping economy, particularly by boosting cement and steel producers that have been battered by a deep real estate recession. Citigroup analysts project that it could add 0.1% to the country’s annual GDP growth for 10 years.

But some are saying “dam it” with an “n”:

• NGOs say that the dam could damage the local ecosystem and warn that similar projects have displaced nearby Tibetan communities.
• India and Bangladesh raised concerns that it would divert water from regions located downstream within the two countries.
• BloombergNEF estimates that wind and solar projects are typically four and six times cheaper, respectively, than hydropower per megawatt of energy produced.

China is going green. The country is due to make up nearly 60% of the world’s new clean energy capacity by 2030, the International Energy Agency projects.—SK

If you’re going to name your company Strategy, you’ve really got to commit to your…strategy. And Co-founder and Chairman Michael Saylor has, transforming a software company that used to be known as MicroStrategy into a bitcoin-buying machine. Last week, the company snatched up another 6,220 bitcoin for $739.8 million, bringing its total holdings of the world’s first digital currency up to 607,770, or ~3.05% of all the bitcoin in existence. So far, it has paid off for Saylor and for investors who embraced his dream of a bitcoin holding corp. Bloomberg notes:

• Strategy’s share price has skyrocketed 3,500% since it began buying up bitcoin in 2020.
• That’s largely because bitcoin itself went up 1,100% over that stretch of time, compared to the S&P 500 rising 120%.

Strategy was the first public company to buy bitcoin, but it has since spawned imitators, most notably GameStop, a company that’s no stranger to speculative buying, and the president’s Trump Media and Technology Group. Still, Strategy’s roadmap to digital asset success isn’t without potential speedbumps as it ties the value of the company to a volatile asset—though some say picking bitcoin, in particular, helps protect that value since there’s a limit to how much can be mined.—AR