EU Hits Pause on Retaliatory Tariffs as Trump Blinks First in Trade Standoff

In a surprising turn in the escalating global trade tensions, the European Union has announced a 90-day pause on its planned retaliatory tariffs against the United States, following President Donald Trump’s temporary suspension of his newly imposed trade duties.

European Commission President Ursula von der Leyen said the EU would “give negotiations a chance” after Trump’s abrupt reversal sparked a sigh of relief across global markets. The move halts the bloc’s planned countermeasures on €21 billion (approximately $23.25 billion) worth of U.S. goods, which were set to take effect as early as next Tuesday.

EU Holds Fire, But Keeps Powder Dry

While acknowledging that EU member states had strongly supported the counter-tariffs—targeting American exports such as motorcycles, poultry, wheat, and clothing—von der Leyen emphasized diplomacy over escalation, at least for now.

“While finalising the adoption of the EU countermeasures… we will put them on hold for 90 days,” she posted on X (formerly Twitter), adding that all options remain on the table. “If negotiations are not satisfactory, our countermeasures will kick in.”

Her remarks came as markets rallied globally, with U.S., Asian, and European indexes surging after days of turmoil. The market relief followed Trump’s decision to scale back most of the sweeping new tariffs he had unveiled just 24 hours earlier—tariffs that had triggered massive sell-offs, wiping nearly $6 trillion off the S&P 500 in a record four-day drop dating back to the 1950s.

Tariff Chaos: Trump’s Backpedal and China Crackdown

Trump’s climbdown came after financial markets reacted violently to his administration’s 25% tariffs on steel and aluminium, coupled with a 10% blanket duty on most other imports. These moves appeared to contribute to a sharp spike in U.S. government bond yields and a wave of global investor anxiety.

While the tariff reprieve provides short-term relief, it’s far from a full retreat. The 10% general duty remains in place, and auto, steel, and aluminium tariffs have not been lifted. Additionally, Canada and Mexico are still subject to 25% tariffs tied to U.S. drug enforcement provisions under the USMCA trade framework.

Simultaneously, Trump increased tariffs on Chinese imports from 104% to 125%, and signed an executive order targeting China’s dominance in global shipping. These moves underline the White House’s tough stance toward Beijing, even as it temporarily shifts gears with other allies.

Europe Cheers, But Remains Wary

Von der Leyen hailed Trump’s action as a welcome step toward stability in the global economy but warned that the EU remains prepared to act if negotiations fail. Behind the scenes, Brussels continues to prepare additional countermeasures, keeping the pressure on Washington.

The initial retaliatory list from the EU included quintessentially American products—a familiar strategy meant to inflict maximum political discomfort in key U.S. states. The temporary suspension of these duties signals the EU’s preference for a negotiated solution, even as it keeps its arsenal intact.

Global Ripple Effects

Beyond the EU-U.S. axis, other countries are also adjusting their strategies. India, for instance, announced its intent to fast-track a trade agreement with the United States in the wake of these developments. Meanwhile, markets recalibrated their expectations for European Central Bank interest rate policy, with yields rising and rate-cut bets diminishing following Trump’s tariff freeze.

What Next?

While cooler heads have prevailed—for now—the pause may prove to be just that: a pause. With a 90-day window for diplomacy, both sides have an opportunity to recalibrate their economic and strategic positions. But should talks falter or rhetoric harden, the risk of another round of tit-for-tat tariffs looms.

For global trade, this moment may represent a fragile truce in what has increasingly looked like a multi-front economic war. As von der Leyen made clear: “All options remain on the table.”