Trump's tariff turnaround: EU initially breathes a sigh of relief

The European Union has praised US President Donald Trump's decision to pause many of the announced punitive tariffs. At the same time, it reaffirmed its intention to take things a step further with Washington.

"I welcome President Trump's announcement of a pause on retaliatory tariffs," European Commission President Ursula von der Leyen said in a statement Thursday morning. "This is an important step towards stabilizing the global economy."

Von der Leyen added that Brussels remains committed to constructive negotiations with Washington to reduce trade barriers.

"Tariffs are taxes that only harm businesses and consumers," she said. "That's why I have always advocated for an agreement to eliminate reciprocal tariffs between the European Union and the United States."

The Commission President announced earlier this week that the EU had proposed abolishing tariffs on all industrial products traded with Washington, including motor vehicles, chemicals and machinery.

She also said on Thursday that the EU would seek to reduce uncertainty in global trade by strengthening trade relations with other countries and deepening its fragmented single market.

“This crisis has made one thing clear: in times of uncertainty, the single market is our anchor, providing stability and resilience,” she said.

Already on Wednesday evening, the incoming Federal Chancellor Friedrich Merz struck a similar tone.

"The Europeans are determined to defend themselves, and this example shows that unity helps the most," Merz said, adding: "Let's all impose zero percent tariffs on transatlantic trade, then the problem will be solved."

Beautiful bond market

The comments come after Donald Trump's surprise decision on Wednesday to issue a 90-day "pause" on most "counter-tariffs" imposed on US trading partners - including a 20 percent tariff on the EU.

However, the 25 percent tariffs on automobiles, steel, and aluminum announced by Washington remain in force, as does the base tariff of 10 percent that came into effect on Saturday.

It remained unclear on Thursday whether the EU would maintain its announced retaliatory measures against the steel and aluminum tariffs.

“The European Commission will now take the necessary time to assess this latest development in close consultation with our Member States and industry before deciding on the next steps,” said Commission spokesperson Olof Gill.

Trump also imposed 125 percent tariffs on China on Wednesday after Beijing increased its tariffs on American goods to 84 percent in retaliation for the US tariffs.

Trump's announcement came just hours after EU member states adopted the Commission's proposal for retaliatory measures against Trump's steel and aluminum tariffs.

The tariffs, ranging from ten to 25 percent on a range of US goods worth €21 billion, are to be phased in over the course of this year, with some of the tariffs expected to be imposed as early as next week.

Trump's surprise announcement came after bond prices collapsed on Wednesday, pushing up US borrowing costs.

"The bond market is very tricky, I've been watching it," Trump told reporters in the Oval Office on Wednesday. "The bond market is beautiful right now. But yes, I saw last night that people were getting a little queasy."

US stock prices jumped on Wednesday, with the S&P 500 rising 9.52 percent - its biggest increase since 2008. European stocks also gained in early trading on Thursday, with the STOXX Europe 600 up six percent at 10 a.m. CEST.

Polish Prime Minister Donald Tusk, whose country currently holds the rotating EU Council presidency, also welcomed Trump's decision on Wednesday.

"Maintaining close transatlantic relations is a shared responsibility of Europeans and Americans, regardless of temporary turbulence," he wrote on X. "So let's make the most of the next 90 days."

An EU official also noted on Thursday that the 90 days will give Brussels time to “extend the talks with the Americans.”

“This gives us a very good breathing space,” the official added.

(om, kn)