U.S. President Donald Trump has postponed imposing a 50% tariff on the European Union until July 9 after a “very nice call” with EU chief Ursula von der Leyen. The decision eases immediate fears of an escalating trade war between two of the world’s largest economies.
Tariff Threats Put on Hold
On Friday, Trump threatened to enforce steep tariffs on the EU as soon as June 1, expressing frustration that talks over previous levies were “going nowhere.” However, after speaking with von der Leyen, he agreed to extend the deadline.
“She just called me… and she asked for an extension on the June 1 date, and she said she wants to get down to serious negotiation,” Trump told reporters before boarding Air Force One in New Jersey. “And I agreed to do that,” he added.
EU Calls for Serious Negotiations
European leaders have responded by urging meaningful dialogue to resolve trade disputes. German Finance Minister Lars Klingbeil called for “serious negotiations” with Washington. “We don’t need any further provocations,” Klingbeil, who is also Germany’s vice chancellor, told Bild newspaper. “The U.S. tariffs endanger the U.S. economy just as much as the German and European economy.”
The EU’s trade chief, Maros Sefcovic, emphasized that trade relations should be based on “mutual respect, not threats.” Irish Taoiseach Micheál Martin described Trump’s tariff proposal as “extremely disappointing,” warning that “tariffs are damaging to all sides.”
Potential for Counter-Tariffs
Bernd Lange, head of the EU’s trade committee, indicated that the EU is prepared to implement countermeasures if necessary. “We will not allow ourselves to be pressured and will objectively attempt to begin negotiations next week,” Lange told Die Welt newspaper. “If the negotiations are unsuccessful, the European Union is strong enough to implement countermeasures, such as counter-tariffs, to offset the economic damage.”
Economic Impact Looms
The European Union is one of the United States’ largest trading partners. According to U.S. government figures, the EU exported over $600 billion in goods to the U.S. last year and imported $370 billion in return, leading to a trade deficit of $236 billion for the U.S. However, when services are included, where U.S. firms hold a significant advantage, the overall trade deficit narrows to approximately $57 billion.
The Trump administration has already imposed several tariffs on the EU, including a 20% “reciprocal” rate on most EU goods, currently suspended pending talks. A 25% import tax on steel, aluminum, and vehicle parts remains in effect, and the U.S. has threatened further tariffs on pharmaceuticals, semiconductors, and other goods.
In response, the EU has announced plans to impose tariffs on nearly €100 billion ($113 billion) worth of U.S. products if negotiations fail.
Concerns Over Economic Downturn
A recent Harris Poll conducted for Bloomberg News indicates that Americans are increasingly worried about the economic impact of trade policies. The survey, conducted in early May among around 2,100 adults, found that 69% expect tariffs to increase the cost of everyday goods, while half believe the economy has deteriorated.
As uncertainty looms, many Americans are cutting back on spending. The poll showed that 60% of respondents have already reduced expenses, with over 70% eating out less and 57% spending less on entertainment.
Economists warn that aggressive tariff strategies could trigger a significant economic slowdown. A Reuters poll in April found a nearly 50% median probability of a U.S. recession in the next 12 months. J.P. Morgan predicted a 60% chance of recession due to tariffs, maintaining that forecast even after Trump’s 90-day pause on most U.S. reciprocal tariffs.
Hope for Resolution
The extension of the tariff deadline provides a crucial window for the U.S. and the EU to engage in meaningful negotiations. Both sides express a desire to avoid further economic harm and find a sustainable path forward.
