Good morning. Today we're talking about the latest in the US-UK trade deal, Amazon's AI shift and River Island scales back.

Big Stories

UK-US trade deal agreed

President Trump and Prime Minister Keir Starmer signed a trade deal to lower tariffs on the sidelines of the G7 summit in Canada. This deal aims to slash tariffs on a range of goods, signaling a strengthening of transatlantic economic ties. The agreement, building on a framework announced in May, primarily targets key sectors. It will immediately remove US tariffs on certain UK aerospace products, providing a boost to British firms like Rolls-Royce. Additionally, tariffs on British automobiles will be reduced to 10% from the current 27.5% for an annual quota of 100,000 vehicles, offering substantial relief to carmakers. While both leaders hailed the deal as a "fair agreement" that would "produce a lot of jobs," a final resolution on steel tariffs remains under negotiation. Though the initial framework suggested a zero-tariff future for UK steel, discussions are ongoing, with the current rate for UK steel standing at 25%, a reprieve from the 50% global tariff recently imposed by the US. The deal also confirms reciprocal market access for beef, with a quota of 13,000 metric tons for each nation, while upholding British food standards.

Amazon's AI workforce shift

Amazon CEO Andy Jassy has informed employees that the company's workforce will likely shrink in coming years as AI chatbots and agents assume more tasks. While AI is expected to foster innovation and create demand for specific new roles, Jassy anticipates a general decrease in the overall need for human workers. This announcement has reportedly met with internal discontent, with some employees concerned that efficiency gains from AI will primarily serve to maintain output with fewer staff, rather than fuel business growth. This sentiment follows recent mandates for some employees to relocate, a tactic sometimes used to prompt resignations. While direct layoffs are possible, Amazon insiders suggest much of the AI-driven reduction will occur through slower hiring. Amazon is not alone in this trend. Salesforce CEO Marc Benioff indicated a likely freeze on software engineer hiring due to AI's productivity enhancements, and Shopify is advising managers to consider AI solutions before hiring humans. Duolingo has even begun automating contractor work. A January World Economic Forum survey revealed that 41% of employers plan to reduce headcount due to automation, and other companies like Microsoft are reportedly cutting staff amid AI investment pushes. Management experts suggest that CEOs being candid about AI's potential impact can be beneficial, signaling to employees the importance of upskilling in AI tools to secure their future roles.

River Island's high street reset

British fashion retailer River Island is undertaking a significant restructuring effort, proposing the closure of 33 of its 230 UK stores by January 2026. This move, which puts hundreds of jobs at risk, is a direct response to the accelerated shift of consumer spending online and the sharply rising costs of high street operations. In 2023, River Island reported a pre-tax loss of £33.2m on a 19% drop in sales, highlighting the urgent need for strategic recalibration. CEO Ben Lewis stated that the current store portfolio is "no longer aligned to our customers' needs," emphasising the dual pressures of digital migration and increasing operating expenses. The company is also seeking rent reductions on a further 71 stores, whose future remains uncertain pending landlord negotiations. Advisers from PwC are overseeing the restructuring plan, which requires creditor approval in August. If successful, new funding will be injected into the business to support its turnaround strategy. River Island aims to minimise job losses by consulting staff and exploring redeployment opportunities.

Elsewhere...

New revenue: WhatsApp announced that it will now show ads from businesses through its Stories-like status feature.

Troubled waters: The government has "stepped up" preparations for the potential temporary nationalisation of Thames Water, the environment secretary has said.

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