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US President Donald Trump backed away from his threat to impose 50 per cent tariffs on imports from the European Union next month, restoring a July 9 deadline to allow for talks between Washington and the 27-nation bloc to produce a deal.
European assets rallied yesterday. The euro hit its highest level against the dollar since April 30, while European shares surged and were poised to recoup the previous session’s losses.
Trump had said on Friday he was recommending a 50pc tariff effective from June 1, expressing frustration that trade negotiations with the EU were not moving quickly enough. The threat roiled global financial markets and intensified a trade war that has been punctuated by frequent changes in tariff policies toward US trading partners and allies.
The US president’s softened stance two days later marked another temporary reprieve in his erratic trade policy, even if the latest whipsawing in decision making reminded policymakers and investors how quickly circumstances could change.
Trump, who has repeatedly expressed disdain for the EU and its treatment of the United States on trade, relented after European Commission President Ursula von der Leyen told him on Sunday that the EU needed more time to come to an agreement.
She asked him during a call to delay the tariffs until July, the deadline he had originally set when he announced new tariffs in April. Trump told reporters he had granted the request.
The pan-European STOXX 600 index rose 1pc as the US deadline was pushed back. The benchmark had lost 0.9pc on Friday after Trump unexpectedly called for higher tariffs on EU goods.
The automobiles and parts index, sensitive to tariff-related pressures, rebounded by 1.4pc. Luxury stocks, highly exposed to the US market, also gained, as did banks.
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