The European Union will pause its first countermeasures 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 ($32.7 billion Cdn) of U.S. imports from next Tuesday in response to Trump’s 25 per cent tariffs on steel and aluminum. It is still assessing how to respond to U.S. car tariffs and the broader 10 per cent levies still in place.
“We want to give negotiations a chance,” von der Leyen said on X. “While finalizing the adoption of the EU countermeasures that saw strong support from our member states, we will put them on hold for 90 days.”
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 toward stabilizing 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.”
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.
Despite the reprieve, some central bankers and analysts remained cautious.
European Central Bank policymaker Francois Villeroy de Galhau, speaking of the pause in the tariff hike, told France Inter Radio it was “less bad news” than before, but uncertainty remained and that was a threat to trust and growth.
Front Burner23:09The last time the U.S. tariffed the world
China not spared
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.
U.S. officials initially made conflicting statements about whether a 10 per cent baseline tariff on all goods would apply to Canada. The White House has confirmed that it won’t. Paul Beaudry, former deputy governor of the Bank of Canada, says it’s good news for Canada for now —but the Trump administration could still change its mind at any time.
Trump’s reversal on the tariffs imposed on other countries is also not absolute. A 10 per cent 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 aluminum that are already in place. That 10 per cent blanket duty does not include Canada; instead, we continue to face 25 per cent tariffs on non-CUSMA goods, on steel and aluminum and some vehicles.Â
Trump’s turnabout, which came less than 24 hours after steep new tariffs kicked in, saw U.S. stock indexes shoot higher as a result, 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.
Meanwhile, China rejected what it called threats and blackmail from Washington.
The U.S.-China trade war is in full swing, with neither side showing signs of backing down. Andrew Chang explains how China is positioned to absorb the shock of U.S. tariffs and what this global economic disruption could mean for their place in the world order.
Images provided by Getty Images, The Canadian Press and Reuters.
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 per cent from the 104 per cent 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.
China will “follow through to the end” if the U.S. insists on its own way, Commerce Ministry spokesperson He Yongqian told a regular press briefing. China’s door was open to dialogue, but this must be based on mutual respect, the ministry said.
Beijing may again respond in kind after imposing 84 per cent tariffs on U.S. imports on Wednesday to match Trump’s earlier tariff salvo.
Trump claims the tariffs aim to fix U.S. trade imbalances, though a large majority of economists don’t view a trade deficit alone as a sign of a country’s economic health.Â
U.S. officials have said they will prioritize talks with other countries as Vietnam, Japan, South Korea and others line up to try and strike a bargain.
China’s yuan hit its lowest against the dollar on Thursday since the global financial crisis.
