Trump delays EU tariff threat, agrees to more time for talks

President Donald Trump has stepped back from his threat to impose 50% tariffs on imports from the European Union next month, opting instead to reinstate a July 9 deadline to allow time for negotiations with the 27-member bloc.

The announcement sparked a rally in European markets on Monday. The euro rose to its highest level against the dollar since April 30, and futures in both European and German stock indices pointed to gains of over 1.5%.

On Friday, Trump had signaled plans to enforce a 50% tariff starting June 1, expressing frustration over the slow pace of trade talks with the EU. The move unsettled global markets and escalated tensions in an already volatile trade environment marked by frequent policy shifts.

His reversal just two days later offered temporary relief, though it underscored the unpredictable nature of U.S. trade policy under his administration. Investors and policymakers were again reminded of how quickly Trump could change course.

Trump changed his stance following a phone call with European Commission President Ursula von der Leyen, who urged him to delay the tariffs to the original July 9 deadline. Trump agreed to the request.

“We had a very nice call, and I agreed to move it,” Trump told reporters upon returning to Washington from a weekend in New Jersey. “She said we will rapidly get together and see if we can work something out.”

Von der Leyen posted on X that she had a “good call” with Trump and confirmed the EU was prepared to move swiftly on negotiations. “To reach a good deal, we would need the time until July 9,” she added.

Auto and Luxury Shares Surge

Trump initially announced a 90-day negotiation window in early April, targeting July 9 as the endpoint. However, his Friday remarks discarded that timeline, saying he had lost interest in pursuing a deal.

Talks have reportedly stalled, with Washington pressing for unilateral concessions while Brussels seeks a balanced agreement that benefits both sides.

The EU already faces 25% U.S. tariffs on steel, aluminum, and automobiles, along with 10% duties on most other goods—tariffs that were set to rise to 20% in July. Without a deal, those levies could surge to 50%, potentially driving up prices for European exports ranging from German cars to French luxury goods.

Shares of European carmakers, high-end retailers, and producers of wine and spirits led gains in the region’s stock futures.

U.S. and European markets fell on Friday, and the dollar weakened after Trump’s tariff threat. His April announcement of wide-ranging tariffs on multiple countries had already shaken global markets, prompting him to pivot toward diplomacy.

While Washington has since secured a trade pact with the UK and advanced talks with China, discussions with the EU have made little headway. This has frustrated Trump and deepened the divide between the two long-standing allies, whose relations have already been strained by his "America First" policies and criticism of Europe's dependence on U.S. defense support.