(Bloomberg) -- When it comes to the economy, it’s been a mixed week for Donald Trump. While he’s likely to claim victory in his battle for lower rates after Federal Reserve Chairman Jerome Powell suggested that the central bank has room to ease, his latest campaign in the trade war was met with French defiance.

Here’s our weekly wrap of what’s going on in the world economy.

Powell Testimony

Powell all but guaranteed the Fed will cut interest rates at the end of this month. In congressional testimony, Powell signaled that a cooling world economy and the uncertainty stemming from the U.S.-China trade war were big enough risks to eclipse June’s surge in U.S. hiring.

The question now is whether policy makers will cut their benchmark by 25 basis points or twice that with Powell declining to limit his options. Markets are pricing in the smaller of the reductions with more easing to come later in the year. Powell also used the opportunity to defend the Fed’s independence and his own position against attacks from President Trump. He said he wouldn’t step down from the role even if Trump attempted to fire him.

Trade Battles

The U.S. president himself is leaving no stone unturned in ending what he deems as unfair trading practices. This week, he took the fight to France by ordering an investigation into the country’s plan to tax big technology companies that would affect U.S. giants from Apple to Amazon. The so-called 301 investigation was used to slap tariffs on China, an indication of the options at Trump’s disposal if the probe finds the French tax will hurt U.S. companies. That didn’t deter French lawmakers from passing the tax bill.

In better news, U.S.-China negotiations are back on with the top trade lieutenants speaking by phone this week for the first time since Trump and Chinese leader Xi Jinping called a truce. More meetings are being planned, according to the White House, though Trump still has plenty of gripes.

European Woes

The European Commission stayed in a gloomy mood on the euro area in updated forecasts this week, and an investor survey said a recession in Germany is inevitable. That continued a pattern of pessimism that’s expected to lead to the European Central Bank throwing more monetary stimulus at the economy later this year.

The economy did offer a small reason for hope, however, with Germany, France, Italy and Spain all reporting gains in industrial production in May. It’s just one month, but that bodes well for the euro-zone figure due out Friday.

Chart of the Week

Americans Surveyed See Artificial Intelligence as Jobs Killer

To contact the reporters on this story: Sarah McGregor in Los Angeles at smcgregor5@bloomberg.net;Fergal O'Brien in Zurich at fobrien@bloomberg.net

To contact the editors responsible for this story: Simon Kennedy at skennedy4@bloomberg.net, Zoe Schneeweiss

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