The European Union will pause its first countermeasures against U.S. tariffs after President Donald Trump temporarily lowered the hefty duties less than a day after imposing them on dozens of countries, European Commission chief Ursula von der Leyen said on Thursday.

The Trump administration is weighing offers from more than a dozen countries on tariff deals and is close to reaching agreements with some of them, White House economic adviser Kevin Hassett said.

“USTR has informed us that there are maybe 15 countries now that have made explicit offers that we’re studying and considering and deciding whether they’re good enough to present the president,” Hassett told reporters at the White House, referring to the U.S. trade representative.

Principals in the administration’s trade policy will meet at the White House on Thursday to discuss how to prioritize the separate negotiations, Hassett said.

The EU was due to launch counter-tariffs on about 21 billion euros ($23.25 billion) of U.S. imports next Tuesday in response to Trump’s 25% tariffs on steel and aluminium. It is still assessing how to respond to U.S. car tariffs and the broader 10% levies that remain in place.

“We want to give negotiations a chance,” von der Leyen said on X. “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 sudden decision on Wednesday to pause most of his hefty new duties brought relief to battered markets and anxious global leaders, even as he ratcheted up a trade war with China.

His turnabout, which came less than 24 hours after steep new tariffs kicked in, followed the most intense episode of financial market volatility since the early days of the COVID-19 pandemic.

U.S. stock indexes shot higher on the news, 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 Trump’s attention.

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% from the 104% 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.

TRADE WAR WITH CHINA

China rejected what it called threats and blackmail from Washington.

China will “follow through to the end” if the U.S. persists, 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 already imposing 84% tariffs on U.S. imports on Wednesday to match Trump’s earlier salvo.

Trump, who claims the tariffs aim to fix U.S. trade imbalances, said a resolution with China on trade is also possible. But 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.

EU PAUSE

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 towards stabilising the global economy, von der Leyen said. But she warned that counter-tariffs could be reinstated if necessary.

“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.”

Trump’s reversal on tariffs is not absolute. A 10% 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 aluminium.

The U.S. tariff pause does not apply to duties paid by Canada and Mexico, because their goods are still subject to 25% fentanyl-related tariffs unless they comply with the U.S.-Mexico-Canada trade agreement’s rules of origin.

India was among countries that said it wants to move quickly on a trade deal with the United States.

UNCERTAINTY AND CONCERNS

Oil prices retreated 2% on Thursday as fears of a deepening U.S.-China trade war and a possible recession eclipsed earlier relief created by Trump’s pause announcement. Wall Street futures were indicating a lower open after Wednesday’s rally.

Some central bankers also remained cautious.

European Central Bank policymaker Francois Villeroy de Galhau told France Inter radio it was “less bad news” than before, but ongoing uncertainty remained a threat to trust and growth.

And business leaders warned that not all was resolved.

The head of the French wine and spirits lobby group FEVS said Trump’s decision to hit pause was “half good news.”

Nicolas Ozanam said the move will initially allow French wine and spirits companies to resume shipments with lower tariffs, and therefore at the same level as other suppliers.

But the 90-day window created logistical constraints, and given that 10% customs duties remained in place, the sector still faced inflationary pressures.

“This will still lead to a rise in prices and therefore a drop in consumption in the United States,” he told Reuters.

Source: Reuters
--Agencies