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In a surprise twist to escalating global trade tensions, the European Union has decided to pause its planned countermeasures against the United States, after President Donald Trump abruptly rolled back the new tariffs he had just imposed on dozens of nations. The move offers a temporary reprieve in what had become an increasingly volatile international trade environment.
EU Postpones Counter-Tariffs Worth €21 Billion
The EU had been gearing up to launch retaliatory tariffs on €21 billion ($23.25 billion) worth of US goods starting next Tuesday. These would have targeted a wide array of products, including maize, wheat, poultry, motorcycles, fruit, and clothing, in response to Trump’s earlier decision to enforce 25% tariffs on imported steel and aluminium.
But after Trump unexpectedly paused a significant portion of the tariffs on Wednesday, European Commission President Ursula von der Leyen confirmed on Thursday that the EU will hold off on retaliation—for now.
“We want to give negotiations a chance,” von der Leyen said on X (formerly Twitter). “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 U-Turn Calms Markets
The US president’s decision to temporarily suspend the most aggressive elements of his tariff hike came just 24 hours after they had begun to take effect. It followed a major spike in global financial market volatility, reminiscent of early COVID-19-era turbulence.
Stock markets rebounded swiftly in the US and carried that momentum into Asian and European trading, while government bond yields also stabilized.
However, Trump maintained pressure on China, increasing tariffs on its imports to 125%, up from the 104% that had just kicked in. He also signed an executive order aimed at curbing China’s influence in the global shipping industry and reviving US shipbuilding capabilities.
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China Hits Back, Calls US Tactics “Blackmail”
The Chinese Commerce Ministry responded strongly to Trump’s latest escalation. Spokesperson He Yongqian warned that China would retaliate if provoked, labeling Washington’s pressure tactics as “blackmail.”
“China will follow through to the end if the US insists on its own way,” he said at a press briefing, while reiterating that Beijing remains open to dialogue, but only based on mutual respect.
China had already matched Trump’s earlier moves with 84% tariffs on US goods.
Meanwhile, the Chinese yuan fell to its lowest level against the US dollar since the global financial crisis, further adding to market anxieties.
EU Welcomes the Pause, But Warns It’s Temporary
Though von der Leyen welcomed Trump’s shift as “an important step towards stabilising the global economy,” she issued a firm warning that the pause does not eliminate the possibility of future retaliation.
“If negotiations are not satisfactory, our countermeasures will kick in. Preparatory work on further countermeasures continues,” she said, emphasizing, “All options remain on the table.”
The 10% blanket duty on nearly all US imports remains in force, according to the White House, and existing tariffs on cars, steel, and aluminium are unaffected. Also exempt from the tariff pause are Canada and Mexico, whose exports could still face 25% fentanyl-related tariffs unless they comply with USMCA rules of origin.
European Markets React, But Uncertainty Remains
European financial markets reacted positively to the pause. Government bond yields jumped, spreads tightened, and investors scaled back bets on European Central Bank rate cuts. But the optimism came with caution.
ECB policymaker François Villeroy de Galhau told France Inter Radio that the pause was “less bad news” than expected, but stressed that uncertainty was still a serious threat to trust and economic growth.
In France, business leaders were mixed in their responses. Nicolas Ozanam, head of the wine and spirits lobby group FEVS, said the pause was “half good news” as it allows for resumed shipments at lower tariffs, but warned of ongoing logistical and cost pressures due to the still-active 10% duties.
“This will still lead to a rise in prices and therefore a drop in consumption in the United States,” Ozanam said.
Global Trade Shifts and the Road Ahead
While the EU is now entering a 90-day window of negotiations, the broader US-China trade war continues to escalate, with long-term impacts on supply chains, currency stability, and global trade flows.
Countries like India, Japan, South Korea, and Vietnam are closely watching the developments, with some already initiating new trade talks with Washington to avoid similar tariff shocks.
The world is now in a wait-and-see mode, with hopes that behind-the-scenes diplomacy can produce agreements before the next economic shockwave.
