The European Union (EU) paused plans for retaliatory tariffs on United States (US) goods on Thursday after president Donald Trump abruptly suspended higher US duties on the bloc and other countries, leaving China in the crosshairs of his trade war.
Trump’s about-face on Wednesday triggered a massive market rebound but Wall Street’s rally fizzled on Thursday and the dollar slumped, as investors remain on edge over the outlook for the world economy.
The US president halted steep tariffs on scores of nations for 90 days.
But he kept a global baseline tariff of 10% intact and punished Beijing for retaliating by slapping a 125% duty on its goods.
The EU, which had faced a 20% tariff, welcomed Trump’s U-turn, saying it was an “important step towards stabilising the global economy”.
The 27-nation bloc responded with its own olive branch, suspending for 90 days tariffs on 20 billion euros’ worth of US goods that had been greenlit in retaliation to duties on steel and aluminium.
“We want to give negotiations a chance,” EU chief Ursula von der Leyen says in a statement.
She warns, however, that “if negotiations are not satisfactory, our countermeasures will kick in” and that all options remain on the table.
Other countries are also lining up to bargain.
Canadian prime minister Mark Carney called Trump’s reversal a “welcome reprieve” and said Ottawa would begin negotiations with Washington on a new economic deal after elections on April 28.
Vietnam said it had agreed with the United States to start trade talks, while Pakistan is sending a delegation to Washington.
But there was no let-up in Trump’s trade war with China, which said the US tariffs policy “goes against the will of the world and goes against the whole world”.
The heightened tariffs against China took effect at the same time as retaliatory levies of 84% imposed by Beijing on US imports.
Beijing added Hollywood to its target list on Thursday as it announced it would “moderately reduce” the number of US films it imports.
But China’s commerce ministry says the door remained open for dialogue.
“We hope the US will meet China halfway, and, based on the principles of mutual respect, peaceful coexistence and win-win cooperation, properly resolve differences through dialogue and consultation,” commerce ninistry spokeswoman He Yongqian says.
Trump has predicted that trade deals will be made with all countries, including China, which has for now refused to roll back retaliatory tariffs on US goods.
“A deal’s going to be made with China. A deal’s going to be made with every one of them,” Trump said at the White House. However, China’s leaders “don’t quite know how to go about it”.
Trump believes his policy will revive America’s lost manufacturing base by forcing companies to relocate to the United States.
The billionaire and former property tycoon has particularly raged against China, accusing it of excess production and “dumping” inexpensive goods on other economies.
Markets have been on a roller-coaster ride since Trump announced his tariff plans last week, with the 10% global levy taking effect on Saturday and the higher ones on Wednesday before the pause.
Investors also began to dump US government bonds – a major economic red light since American sovereign debt is normally seen as a haven for investors in troubled times.
“I saw last night where people were getting a little queasy,” Trump said on Wednesday, though he denied that he backtracked on the tariffs.
Wall Street’s main index were all down more than 2% as trading resumed on Thursday, a day after the tech-heavy Nasdaq soared 12% higher and the S&P 500 surged 9.5%.
Asia and Europe caught up on Thursday, with Tokyo closing 9.1% higher as the Japanese government welcomed the tariff pause but demanded that other levies be halted.
Paris and Frankfurt were up more than 5% in afternoon deals while London rose 4.5%.
“This will go down in American history as the greatest trade negotiating day we have ever had,” says Trump’s senior trade advisor, Peter Navarro.
“We’re in a beautiful position for the next 90 days” to seek trade deals with partners, he told ABC News, adding that more than 75 have sought to negotiate with Washington.
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