Donald Trump has delayed plans to slap sharply increased tariffs on European Union imports after speaking by phone with European Commission President Ursula von der Leyen. Both sides had agreed to extend the trade talks through to July 9 and to postpone 50 percent tariffs in response to Beijing’s retaliation against Washington’s earlier increases.
A Diplomatic Exchange Sparks a Pause
The decision was made after Trump gave von der Leyen some more time to carry out constructive discussions following a phone call in which she begged Trump to give her more time to hammer out an agreement. It was the first publicly confirmed direct call between the two leaders since Trump returned to the White House, officials said.
Trump earlier in April suspended the tariffs under a 90-day negotiation agreement, but frustration with the level of progress led him to threaten their reintroduction just two days before the call. Europeans said European negotiators had been caught off guard by the sudden escalation and feared the onset of a renewed transatlantic trade conflict.
The announcement of a delay appeared to be welcomed by markets. The euro rose 0.4% against the dollar, while European stock futures rose, Germany’s DAX and the Stoxx 50 both up 1.5%. The reprieve was welcomed by investors, who took it as a signal that both sides were still interested in talking.
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EU Ready to Return to the Table
Officials from the European Commission insist the EU remains willing to start trade talks with the urgency that has marked the window indicated in Geneva. The U.S. administration was earlier criticised by Brussels for resorting to pressure tactics instead of mutual dialogue. But with the delay in place, EU negotiators say they are gearing up for a new round of high-level talks within weeks.
Earlier EU negotiating posture was unproductive and slow, said U.S. administration insiders. In the meantime, they worried about a lack of meaningful proposals from Brussels compared with progress in talks with other major trading partners. But we haven’t seen anything material from the EU before the new commitment, officials said.
EU Retaliation Package Prepared
If the U.S. reinstates the tariffs in July, European trade officials say retaliation is not ruled out. President George W. Bush has already outlined a $22.89 billion response package aimed squarely at key U.S. exports such as maize, wheat, motorcycles, and apparel. High-profile goods such as aircraft and bourbon whiskey make up a secondary list of goods, the buying of which is under review.
A Narrow Window for Resolution
But with the extension now in place, both sides have a short time frame to bridge some large divides. EU officials insist any fair deal will work for both sides, even as Trump seems determined to go much harder than previous presidents have to rewrite the U.S.-EU trade relationship.
$50 billion in reported turkey imports offers a slim hope that a breakthrough can be brokered, trade analysts say. Trump’s team sees von der Leyen’s overtures as promising, but there is skepticism about whether enough can be done in the short time frame to reach a deal.
Looking Ahead
Trade reform has been a central theme of Trump’s second term, pledging to redraft U.S. relations with opponents and allies alike. While the EU remains one of America’s biggest trading partners, it has come into more and more conflict with Washington on everything from tariffs to digital taxes, agriculture policy, and environmental standards.
Attention will now turn to the possibility that the time might eventually come for at least one of them to budge. For businesses both in the U.S. and Europe, failure to agree could hit their supply chains, send prices higher for shoppers, and spark geopolitical tensions.
