During a White House cabinet meeting on Thursday, President Donald Trump portrayed his aggressive trade policies as a victory against Europe, but he also recognized difficulties in the rapidly escalating U.S.-China trade war. "The European Union said they wouldn’t retaliate until they saw... what we did with China," he said. "They heard about what we did with China... and said, 'We'll hold back.' Trump attempted to brush off any concern about global market volatility, saying that they have a winning strategy.
EU Suspends Retaliatory Tariffs, Seek Negotiations
The European Union has put on hold plans for €20 billion in tariffs on U.S. goods in response to President Trump's announcement that he would delay the implementation of higher tariffs on European imports. European Commission President Ursula von der Leyen described the delay as an opportunity to "give negotiations a chance" but warned that countermeasures would have to resume in the event that the negotiations are unsuccessful. Trump also echoed a conditional truce, stating that the United States would return to the tariffs in the event of no agreement within 90 days.
The U.S.-China Trade War
The White House has indicated that the total tariff rate on Chinese imports in the United States has increased to 145% once recent increases are included with previously imposed tariffs. China has responded with its own tariffs at an average rate of 84% on American imports, which further aggravated U.S.-China relations. President Trump has defended this approach to trade as a strategy to repatriate manufacturing jobs and lower the trade deficit with global partners while Commerce Secretary Howard Lutnick proposed a "Golden Age” of economic growth in the United States. In a separate development, Beijing cut Hollywood film imports and said that it was still willing to engage in discussions while prompting that each side respect one another in resolving these problems.
Global Reactions
Canada viewed the announcement of the delay in tariffs as a “respite,” and Prime Minister Mark Carney pledged that the two nations will begin trade negotiations after the Canadian election. Vietnam was set to begin discussions with the U.S., and Pakistan was planning to send a delegation to Washington. The markets were still volatile, nonetheless, as the Nasdaq dropped more than 6% at times Thursday, a drastic turn from Wednesday’s rally after the partial rollback of tariffs by Trump.
Trump's Optimism
Scott Bessent, the Treasury Secretary, played down market fluctuations, promising positive U.S. inflation data and improvement in the economy. Trump acknowledged "transition costs" but played down threats to make his case, calling the whole strategy long term "a beautiful thing." People on the Left argue that continued tariffs will raise consumer prices and distort supply chains.