Highlights of the week: 'Big Beautiful' law, letters from Trump, minister's tears

U.S. President Donald Trump signed the "Big Beautiful" law - it involves increased spending and an increase in the state budget deficit. At the same time, Trump said that his administration began sending out notices about the introduction of increased duties from August 1 - they will be received by countries with which the U.S. has not concluded new trade agreements. The main events from June 30 to July 4 - in our review;

The US House of Representatives on Thursday, July 3, approved the "Big Beautiful" bill, and US President Donald Trump signed the document on July 4.  It includes tax breaks, increased spending on border security, and significant cuts to the Medicaid insurance program and other social initiatives. The document paved the way for the realization of most of Trump's campaign promises, including in terms of tax policy. The document is the first of its kind in the United States;

 Democrats opposed the initiative: in their view, the bill disproportionately benefits the rich and would deprive millions of the poor of health insurance. Republicans insist that changes to Medicaid would reduce fraud and misuse of funds. The independent Congressional Budget Office (CBO) has warned that the bill could increase the U.S. government deficit by $3.4 trillion over the next decade. The White House rejected those estimates, accusing the agency of bias.

- On who benefits from the bill and who doesn't, Oninvest editor Rinat Tairov wrote in "Congress Approves Trump's 'Big and Beautiful' Law. Who will win and who will lose?".

The June jobs report, published on Thursday, July 3, showed that the U.S. labor market remained stronger than expected. The unemployment rate came in below market consensus at 4.1% versus 4.3%. The number of new jobs in the U.S. (excluding the agricultural sector) rose by 147,000 in June, while economists surveyed by Dow Jones predicted an increase of 110,000 

"We're just not seeing the effects of trade duties or trade tensions," RSM chief economist Joe Brusuelas told Yahoo Finance. He said the numbers support the scenario of a slowing economy, but one that remains resilient.

After the publication of the data, the market sharply revised expectations for a Fed rate cut in July: the probability of such a move fell from 24% to 5% (according to CME FedWatch Tool). Expectations for a rate cut in September also fell - to 78% from 94% the day before;

The dollar index - its exchange rate against a basket of six world currencies (including the euro, pound sterling and yen) - is down 10.8% in the first half of 2025. This is the worst half-year for the U.S. currency since 1973, when the world abandoned the Bretton Woods system of pegging currencies to the dollar and gold and switched to a floating exchange rate, wrote the Financial Times. At the time, the U.S. currency collapsed by 15%.

"The dollar has become the 'whipping boy' in the era of chaotic Trump 2.0 policies," said ING FX strategist Francesco Pesole. He said the imposition and removal of duties, huge U.S. borrowing and concerns about the Fed's independence have undermined the dollar's appeal as a protective asset for investors.

- The euro, by contrast, has gained almost 14% against the dollar this year. Financier Sergiy Romanchuk discusses whether the European currency can become an alternative to the US currency in article "Historical Moment for the Euro: Can It Oppose the Dollar?" 

Meta CEO Mark Zuckerberg is assembling a team to develop Meta Superintelligence Labs. The new direction will be headed by Alexander Wang (ex-CEO of Scale AI) and former GitHub head Nat Friedman, the chief scientist has not yet been appointed, wrote Wired. To poach the best talent in the market, the company is offering top AI researchers compensation packages of up to $300 million over four years, including more than $100 million in the first year. 

Meta, according to Wired, has already made at least 10 offers and poached at least seven employees from OpenAI, prompting a reaction from the head of that company, Sam Altman. He sharply condemned Meta's actions and confirmed that the company is also working on compensation adjustments. However, Meta's representative denied the information about the compensation, noting that its size and structure had been distorted.

A senior engineer who spoke to Wired said his salary at Meta was about $850,000 a year - "an impressive sum that pales in comparison to the packages being offered now." Higher-level employees earn an average of $1.54 million a year at Meta. By comparison, in 2024, Microsoft CEO Satya Nadella earned $79.1 million and Uber CEO Dara Khosrowshahi earned $39.4 million, Wired notes. 

Donald Trump has said that the US will start sending letters to its trading partners with whom it has not reached trade agreements outlining new tariff rates. They will begin to take effect on August 1, writes The Guardian. According to the U.S. president, the letters will be sent to the states' trading partners by July 9, the day the 90-day delay in imposing the so-called "mirror duties" ends.

He noted that the duty rates will range from 10 to 70%, without specifying which countries or goods will fall under the new tariffs.

So far, the Trump administration has reached agreements with Britain and Vietnam, as well as China. Treasury Secretary Scott Bessent said Thursday that the U.S. is close to a framework agreement with the European Union.

Trump announced a 10 percent duty on all U.S. imports and higher rates for dozens of countries on April 2. He called it "liberation day." But the states put  the imposition of the increased duties on a 90-day pause. At the same time, the basic rates of 10% on most goods imported into the country remained in effect.

On July 2, investors staged a sell-off in the British stock market as British government bond prices fell to their highest since October 2022 and yields jumped. The pound weakened against the dollar.

The sell-off was triggered by an emotional scene in the House of Commons as investors reacted to the threat of possible resignation of Finance Minister Rachel Reeves, who was seen in tears  in Parliament during a debate that was broadcast online. It happened as Prime Minister Keir Starmer was defending welfare reform designed to save 5.5 billion pounds ($7.5 billion) by 2029. During the debate, opposition Conservative Party leader Kemi Badenoch, who opposes benefit cuts, called into question whether Rachel Reeves would be able to keep her post until the next election.

As a result of the sell-off, the capitalization of the British market dropped by £3 billion. The market reaction forced the Prime Minister to say that he has no plans to change the head of the Treasury and Reeves "will be Chancellor for a very long time". The next day, July 3, British government bonds and the pound recovered losses after a sell-off the day before. 

- You can read about the difficulties the government may face in budget planning in material Oninvest's "British Bonds and Pound regrow after collapse due to Finance Minister's tears".

This article was AI-translated and verified by a human editor