EU pauses countermeasures against US tariffs

PARIS: The European Union will pause its first countermeasures against US tariffs after President Donald Trump temporarily lowered the hefty duties he had just imposed on dozens of countries, European Commission chief Ursula von der Leyen said on Thursday (Apr 10).

The bloc was due to launch counter-tariffs on about 21 billion euros (US$23.25 billion) of US imports from next Tuesday in response to Trump's 25 per cent tariffs on steel and aluminium. It is still assessing how to respond to US car tariffs and the broader 10 per cent levies still in place.

"We want to give negotiations a chance," von der Leyen said on X.

"While finalising the adoption of the EU countermeasures that saw strong support from our Member States, we will put them on hold for 90 days."

The EU measures approved on Wednesday targeted more than 20 billion euros' worth of US products, including soybeans, motorcycles and beauty products.

EU PAUSE

In Europe, euro zone government bond yields jumped, spreads tightened, and markets scaled back their bets on European Central Bank rate cuts after Trump's latest announcement. European shares surged.

Trump's move was an important step towards stabilising the global economy, von der Leyen said, before announcing a pause in the EU's own counter-tariffs.

But she warned they could be brought back in.

"If negotiations are not satisfactory, our countermeasures will kick in. Preparatory work on further countermeasures continues," she said, before adding: "As I have said before, all options remain on the table."

Trump's reversal on the tariffs imposed on other countries is also not absolute. A 10 per cent blanket duty on almost all US imports will remain in effect, the White House said. The announcement also does not appear to affect duties on autos, steel and aluminium that are already in place.

The US tariff pause also does not apply to duties paid by Canada and Mexico, because their goods are still subject to 25 per cent fentanyl-related tariffs if they do not comply with the US-Mexico-Canada trade agreement's rules of origin.

The EU had been due to impose extra tariffs on US imports including maize, wheat, motorcycles, poultry, fruit and clothing. Those are now suspended.

Elsewhere, India was among the countries that said it wants to move quickly on a trade deal with the United States.

UNCERTAINTY

Despite the reprieve, some central bankers and analysts remained cautious.

European Central Bank policymaker Francois Villeroy de Galhau, speaking of the pause in the tariff hike, told France Inter Radio it was "less bad news" than before, but uncertainty remained and that was a threat to trust and growth.

After saying his plans wouldn't change, Trump indicated that the near-panic in markets that had unfolded since his Apr 2 announcements had factored into his decision to suspend the tariffs.

"You have to be flexible," he told reporters.