Trump Delays 50% EU Tariff Deadline To July 9, Shifts Focus On ‘Made In America’ Push

President Donald Trump has announced an extension of the deadline for imposing higher tariffs on European Union goods until July 9, following discussions with EU Commission President Ursula von der Leyen.

Initially set to end on June 1, the tariff pause now remains at 10%, down from the original 20% slated under reciprocal rates announced in April.

In a statement to reporters at Morristown Airport in New Jersey, Trump remarked, "We had a very nice call and I agreed to move it." This decision marks a temporary reprieve amidst escalating tensions over trade practices between the US and the EU.

Challenges and Negotiations
The extension comes after Trump's recent threat to escalate tariffs to 50% starting June 1, citing dissatisfaction with the pace of negotiations and alleged unfair treatment of US companies by the EU.

 

Deputy Treasury Secretary Michael Faulkender highlighted the complexities, noting the dual challenge of negotiating with the EU as a bloc on tariffs while addressing non-tariff barriers with individual European nations.

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"Europe is ready to advance talks swiftly and decisively," von der Leyen stated, emphasizing the EU's commitment to negotiating a "good deal" by July 9.

This sentiment follows recent efforts by EU officials, including a revived trade proposal and discussions aimed at enhancing economic security and mutual investments.

Economic Impact and Market Response
The potential impact of Trump's tariff threats looms large, affecting an estimated $321 billion worth of US-EU goods trade. According to Bloomberg Economics, such tariffs could lower US GDP by nearly 0.6% and increase consumer prices by more than 0.3%.

US equity-index futures responded positively to Trump's announcement, with early Asian trading showing gains. Meanwhile, the dollar, which had fallen to its lowest level since December 2023 amid tariff uncertainties, experienced fluctuations following the news.

Strategic Objectives and Future Directions
Trump reiterated his focus on incentivising domestic manufacturing, particularly in chips, computers, and AI development sectors. Despite recent tariff threats, he concurred with Treasury Secretary Scott Bessent's remarks that the US does not need to relocate textile manufacturing back within its borders.

"We're not looking to make sneakers and T-shirts; we want to make military equipment and big things," Trump asserted, underscoring his administration's industrial priorities amidst evolving trade negotiations.

As the July 9 deadline approaches, stakeholders on both sides of the Atlantic await further developments in US-EU trade relations. The extension provides a window for continued negotiations aimed at resolving trade disputes and fostering economic cooperation amid global economic challenges.

(With Inputs From Bloomberg)