The European Union has agreed to hold off on its own counter-tariffs against US goods, following a sudden reprieve of sweeping tariffs by US President Donald Trump. The move comes as markets breathed a sigh of relief, with major stock indices in the US surging as investors piled back into equities.
The European Union has agreed to hold off on its own counter-tariffs against US goods, following a sudden reprieve of sweeping tariffs by US President Donald Trump. The move comes as markets breathed a sigh of relief, with major stock indices in the US surging as investors piled back into equities.
Impact of Trump’s Tariff Reprieve
Trump’s decision to pause tariffs on most countries for 90 days has triggered a significant reaction from European leaders. EU Commission President Ursula von der Leyen welcomed the move, stating that it was an ‘important step‘ in stabilizing the global economy. However, she also emphasized the need for clear and predictable conditions for trade and supply chains to function.
The European Union (EU) is a political and economic union of 27 member states located primarily in Europe.
It was established in 1993 with the Maastricht Treaty, which created a single market and a currency, the euro.
The EU has its own parliament, council, and commission, which make laws and policies for its members.
Its main goals include promoting economic growth, stability, and peace among member states.
Rebound in European Stock Markets
The suspension of Trump’s tariffs has led to a rebound in European stock markets, with Germany‘s DAX index jumping 8.2% and Paris rising 7.3%. London also saw a significant increase, with the FTSE 100 jumping 5.3%. The rebound follows a drop of around 3% on Wednesday after Trump’s tariffs went into effect.
China Seeks Dialogue Amid Escalating Trade War
China has called for dialogue with the US, urging Washington to meet it ‘halfway‘ in trade talks. However, Beijing has also warned that the use of pressure and threats would not be effective in resolving the issue. China has vowed to continue resolutely safeguarding its sovereignty, security, and development interests.
EU Welcomes Trump’s Tariff Reprieve
The European Union has welcomed Trump’s decision to pause tariffs for 90 days, seeing it as a positive step towards stabilizing the global economy. However, the EU remains committed to constructive negotiations with the US, with the goal of achieving frictionless and mutually beneficial trade.
Uncertainty Over US-China Trade War
Despite the reprieve, uncertainty remains over how the Trump administration will respond to EU measures targeting €20 billion worth of US products. China has vowed to continue seeking adequate responses as it remains the target of massive US trade tariffs despite Trump’s turnaround decision.
The US-China trade war began in 2018, with the US imposing tariffs on Chinese goods worth $50 billion.
China retaliated with its own tariffs, sparking a cycle of escalation.
The dispute centers on 'intellectual property theft, technology transfer, and market access.'
The US has also accused China of currency manipulation and unfair trade practices.
The trade war has had significant economic impacts, including higher prices for consumers and reduced global trade.
In 2020, the two countries signed Phase One of a trade deal, which included 'Chinese purchases of US goods and services.'
China has also filed a protest with the World Trade Organization (WTO), complaining of ‘bullying‘ tactics by the Trump administration. Chinese firms that use US technology company Amazon to sell products are preparing to either raise their prices for the US or leave the market.
A deal is expected to be reached between the US and China, according to Trump. However, the road ahead remains uncertain, with both sides continuing to impose tit-for-tat tariffs in a seemingly endless upward spiral.
The US-China trade talks refer to a series of negotiations between the United States and China aimed at resolving trade disputes and addressing issues such as intellectual property theft, technology transfer, and market access.
The talks began in 2017 but have been ongoing since 2001 with varying degrees of success.
Key issues include tariffs imposed by both countries, with the US imposing tariffs on Chinese goods worth $360 billion and China retaliating with tariffs on US goods worth $110 billion.
