Stock markets in Europe surge following Trump's decision to postpone 50% tariffs on EU until July 9th.
US President Donald Trump postponed the implementation of a 50% tariff on EU imports indefinitely, following a phone call with European Commission President Ursula von der Leyen. The tariff deadline was set for July 9, 2025, according to Trump's Truth Social post. This announcement sparked a surge in US stock futures and European equities on Monday, as investors viewed the agreement as reducing immediate uncertainty and potential trade disruptions.
Trump had previously announced 20% "reciprocal tariffs" on EU products in April but later reduced them to 10% for three months. However, he threatened to impose a 50% tariff from June 1, citing disagreements among EU member states over negotiations. The EU reportedly submitted a revised trade proposal to the US last week, according to the bloc's trade chief, Maroš Šefčovič.
In a social media post on Friday, Trump highlighted the EU's non-tariff barriers as a significant obstacle, including VAT regimes, corporate penalties, and trade restrictions that contribute to a significant trade deficit with the US. Trump had previously levied tariffs against EU products, which triggered broad market sell-offs in both the US and Europe, renewing global trade tensions.
European stock markets opened higher on Monday, with the Euro Stoxx 600 rising 1.00% and the DAX surging 1.67% as of 9:25 am CEST. The US stock futures also rebounded significantly, with the Dow Jones Industrial Average rising 0.85%, the S&P 500 up 1%, and the Nasdaq 100 climbing 1.19%. Asian markets were mixed, while the euro reached a one-month high against the US dollar during the Asian session.
Analysts suggest that the tariff delay prompted traders to place their bets that any new tariff threat is merely bluster, and existing tariffs would eventually be lowered. However, worries remain over US assets' long-term prospects, with Moody's recently downgrading the US credit rating due to rising government debt and a widening budget deficit. Trump's proposed tax cuts and spending plans face stiff opposition in Congress, which could exacerbate these issues further.
The postponement of the 50% tariff on EU imports by President Trump has benefited both US and European businesses, as indicated by the surge in US stock futures and European equities on Monday. This delay suggests a reduction in immediate uncertainty and potential trade disruptions, a relieving factor for businesses (general-news).
Trump's ongoing disagreements with EU member states over negotiations, as well as concerns about US assets' long-term prospects due to rising government debt and a widening budget deficit, continue to pose challenges in the realm of finance and politics (politics).
