The European Union will halt its first retaliation against U.S. tariffs after President Donald Trump temporarily lowered the hefty duties he had just imposed on dozens of countries, European Commission chief Ursula von der Leyen said on Thursday.
The bloc was due to launch counter-tariffs on about 21 billion euros ($23.25 billion) of U.S. imports from next Tuesday in response to Trump’s 25% tariffs on steel and aluminium. It is still assessing how to respond to U.S. car tariffs and the broader 10% levies still in place.
“We want to give negotiations a chance,” von der Leyen said on X “While finalising the adoption of the EU countermeasures that saw strong support from our Member States, we will put them on hold for 90 days.”
Trump’s sudden decision on Wednesday to pause most of his hefty new duties brought relief to battered global markets and anxious global leaders, even as he ratcheted up a trade war with China.
His turnabout, which came less than 24 hours after steep new tariffs kicked in, followed the most intense episode of financial market volatility since the early days of the COVID-19 pandemic.
U.S. stock indexes shot higher on the news, and the relief continued into Asian and European trading on Thursday.
Before Trump’s U-turn, the upheaval had erased trillions of dollars from stock markets and led to an unsettling surge in U.S. government bond yields that appeared to catch the U.S. president’s attention.
Trump kept the pressure on China, the world’s No. 2 economy and second-biggest provider of U.S. imports, with an increase of tariffs on Chinese imports to 125% from the 104% level that kicked in on Wednesday.
He also signed an executive order aimed at reducing China’s grip on the global shipping industry and at reviving U.S. shipbuilding.
In Europe, euro zone government bond yields jumped, spreads tightened, and markets scaled back their bets on European Central Bank rate cuts after Trump’s latest announcement. European shares surged.
Trump’s move was an important step towards stabilising the global economy, von der Leyen said, before announcing a pause in the EU’s own counter-tariffs.
But she warned they could be brought back in.
“If negotiations are not satisfactory, our countermeasures will kick in. Preparatory work on further countermeasures continues,” she said, before adding: “As I have said before, all options remain on the table.”
Trump’s reversal on tariffs is not absolute. A 10% blanket duty on almost all U.S. imports will remain in effect, the White House said.
The announcement also does not appear to affect duties on autos, steel, and aluminium that are already in place.
The U.S. tariff pause also does not apply to duties paid by Canada and Mexico, because their goods are still subject to 25% fentanyl-related tariffs if they do not comply with the U.S.-Mexico-Canada trade agreement’s rules of origin.
The EU had been due to impose extra tariffs on U.S. imports, including maize, wheat, motorcycles, poultry, fruit, and clothing. Those are now suspended.
Since Trump unveiled his tariffs late on Wednesday, S&P 500 companies have lost almost $6 trillion in stock market value, a record four-day decline for the benchmark going back to the 1950s
Elsewhere, India was among the countries that said it wants to move quickly on a trade deal with the United States.
