
In a significant but temporary easing of escalating trade tensions, President Donald Trump announced the extension of a deadline to impose 50% tariffs on goods from the European Union, following a phone conversation with European Commission President Ursula von der Leyen.
The tariffs, initially threatened to begin on June 1, will now be postponed until July 9, aligning with the end of a previously declared 90-day pause on reciprocal tariffs.
“We had a very nice call and I agreed to move it,” Trump told reporters Sunday from Morristown Airport, New Jersey.
From 20% to 50%: A Growing Threat
The EU had originally been subject to 20% tariffs, temporarily reduced to 10% as part of ongoing negotiations. But Trump’s recent warning of a sweeping 50% levy escalated concerns about the fragility of trade relations between the U.S. and Europe.
Trump has expressed frustration with what he calls the EU’s “slow-walking” of negotiations and its targeting of U.S. companies via regulation and lawsuits.
Markets responded with cautious optimism to the delay. U.S. and European equity-index futures rose, while Asian markets climbed early Monday. The dollar, which had recently fallen to its lowest level since December 2023, continued to fluctuate.
Renewed Dialogue, But Unclear Demands
Von der Leyen reaffirmed the EU’s willingness to advance talks “swiftly and decisively,” while EU negotiators highlighted the need for more time to finalize a “good deal.”
Despite the positive tone, uncertainty remains about what exactly the Trump administration wants. EU officials have proposed reducing tariffs to zero on many goods, but the U.S. side continues to focus on non-tariff barriers – regulations, standards, and other restrictions that Trump views as unfair trade practices.
“The U.S. is facing a dual-track negotiation: with the EU as a bloc, and with individual member states on technical barriers,” said Deputy Treasury Secretary Michael Faulkender, calling it a “negotiation problem.”
A Broader Vision for U.S. Manufacturing
The tariff pressure is part of Trump’s broader push to rebuild domestic manufacturing, but with a clear shift in scope. While rejecting the idea of bringing back textile and low-margin goods production, Trump emphasized a focus on strategic industries like chips, defense equipment, computers, and AI.
“We’re not looking to make sneakers and T-shirts,” Trump said Sunday. “We want to make big things – military equipment, chips, AI.”
His administration’s revived trade posture includes threats of 25% tariffs on smartphones made overseas by companies like Apple and Samsung, as well as levies on semiconductors and pharmaceutical imports.
Economic Impact
According to Bloomberg Economics, imposing a 50% tariff on EU goods – which affects roughly $321 billion in annual trade – would: Cut U.S. GDP by up to 0.6% & Raise consumer prices by more than 0.3%
While negotiations continue, the delay buys time for both sides – but if talks stall again, the consequences could be sharp and widespread.