European Stocks Rally as Trump Delays Tariff Deadline

Strategic Insights -

As the European Union and the United States engage in talks over trade tariffs, Donald Trump's decision to delay imposing import taxes on Brussels has brought a welcome respite for European stocks. Germany's DAX index rose by 1.6% and the French CAC 40 index rallied by 1.1% after the US President backed down from his threat to impose tariffs from June 1. This reversal has erased last week's losses, when Trump first made his threat. Markets in the US and UK were closed for public holidays.

Key Takeaways:

  • The US President has extended the EU's deadline to July 9, giving Brussels more time to reach a deal to avoid tariffs.
  • The EU sold €443 billion (or £443 billion) in goods to the US last year, while buying €273 billion (£273 billion), according to US government figures.
  • Germany and Ireland will be among the countries most affected if no deal is reached and Trump makes good on his threat to hit the EU with tariffs in July.
  • A European commission spokesman said there was "new impetus" to the talks with Washington after Trump's call with EU counterpart Ursula von der Leyen.
  • French President Emmanuel Macron reported a "good exchange" between Trump and the EU, saying that discussions are "advancing."
  • The sudden reversal has revived hopes in Europe's industrial heartlands that a deal can be reached to avoid the worst of the tariffs and economic catastrophe.

Statistics:

  • The US President has delayed the tariff deadline until July 9.
  • The EU sold €443 billion in goods to the US last year.
  • The EU bought €273 billion in goods from the US last year.
  • The DAX index rose by 1.6% on the news.
  • The CAC 40 index rallied by 1.1% on the news.
  • The reversal erased last Friday's losses, when Mr Trump first made his threat.

Sources:

  • A European commission spokesman
  • US government figures
  • Ursula von der Leyen, European Commission
  • Emmanuel Macron, French President