Quick Hit:

The European Union announced Thursday it would delay retaliatory tariffs on U.S. goods after President Donald Trump eased his reciprocal tariff policy.

Key Details:

• The EU had planned to slap tariffs on over $23 billion in U.S. imports starting next week, including American agricultural goods, motorcycles, and clothing. Those measures are now on hold for 90 days.

• Trump’s surprise decision Wednesday to freeze tariff hikes on more than 75 countries—excluding China—triggered a global market rally and led to a recalibration of EU strategy.

• The White House confirmed the freeze doesn’t affect tariffs already in place on cars, steel, aluminum, or imports from Canada and Mexico, which still face 25% penalties related to fentanyl enforcement.

Diving Deeper:

President Donald Trump’s abrupt decision Wednesday to hit pause on his latest round of sweeping tariffs is already reshaping the international trade landscape. On Thursday, the European Union announced it would shelve its first round of retaliatory measures targeting American products in response to Trump’s earlier tariff escalation.

European Commission President Ursula von der Leyen said in a post on X that the EU would “give negotiations a chance,” halting the planned countermeasures for 90 days. The package had been set to target roughly €21 billion ($23.25 billion) worth of U.S. goods, a response to Trump’s previous 25% duties on steel and aluminum.

“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,” von der Leyen posted. However, she cautioned, “If negotiations are not satisfactory, our countermeasures will kick in… all options remain on the table.”

The EU’s response comes after Trump announced a temporary tariff reprieve for more than 75 countries that had not retaliated against his earlier trade moves. In the same breath, he raised tariffs on Chinese imports to 125%, escalating his economic confrontation with Beijing.

Markets rallied following the announcement, with U.S., Asian, and European indexes all rebounding sharply after days of intense volatility. 

Still, the White House clarified that the tariff reprieve does not extend to several areas. A blanket 10% duty remains in place on most U.S. imports. Tariffs on autos, steel, and aluminum are unchanged. Additionally, Canada and Mexico are still subject to 25% tariffs tied to compliance with U.S.-Mexico-Canada trade agreement rules, particularly on fentanyl-related goods.

Europe’s pause also reflects strategic recalibration. With negotiations back on the table, countries such as Japan, Vietnam, South Korea, and India are expected to step up efforts to strike favorable deals with Washington. Meanwhile, Beijing responded defiantly. A spokesman for China’s Ministry of Commerce said the U.S. was resorting to “blackmail” and vowed to “follow through to the end” if Washington continued on its current path. China had already imposed retaliatory tariffs of 84% on U.S. goods just one day earlier.

President Trump, meanwhile, has said the goal is not confrontation, but fairness. “At some point, hopefully in the near future, China will realize that the days of ripping off the U.S.A., and other Countries, is no longer sustainable or acceptable,” he wrote Wednesday.