European Union pauses retaliatory tariffs, global stock markets rebound

European Union (EU) announced on Thursday that it would temporarily pause its trade countermeasures against the United States as the global stock markets surged. 

In a statement, European Commission President Ursula von der Leyen said the 90-day delay would give all parties a chance to negotiate a more permanent solution to ongoing trade disputes with the US.

The EU move followed President Donald Trump’s decision to pause and lower tariffs on more than 75 countries, while sharply increasing tariffs on Chinese goods to 125%. 

Von der Leyen said Europe was choosing dialogue over confrontation, but warned, “all options remain on the table” if talks break down. 

If the EU went ahead with its tariffs, it would have introduced tariffs of up to 25% on hundreds of American products as a retaliation for US tariffs.

Investors welcomed the news, fuelling rallies across Asia and Europe. 

Japan’s Nikkei 225 index rose about nine percent, while the broader Topix jumped eight percent. 

South Korea’s Kospi climbed more than six percent, surpassing 2,400 points. 

Australia’s ASX 200 also finished up, gaining more than four percent, while Taiwan’s market rebounded from a ten percent drop last week, closing with gains of over nine percent.

In Hong Kong, the Hang Seng Index rose by more than two percent, and Singapore’s STI Index advanced five percent. 

China’s Shanghai Composite Index closed 1.2% higher, even as Beijing criticized Trump’s move to raise tariffs on Chinese exports to 125%. 

The Chinese government also pledged to reduce the number of American films allowed into its market, adding another strain to relations between the world’s two largest economies.

European markets followed the Asian markets and surged back as well. 

London’s FTSE 100 advanced by more than four percent in early trading, France’s CAC index climbed five percent, Germany’s DAX rose six percent, and the pan-European STOXX 600 gained five percent. 

Despite this partial rebound, most benchmarks remained below their levels from early April, when Trump first threatened the “Liberation Day” tariffs.

Lin Jian, a spokesperson for China’s Foreign Ministry, blasted the US, saying it was “openly defying global norms.” 

China’s Commerce Ministry indicated negotiations remain possible, with spokesperson He Yongqian telling reporters that “the door is open for talks,” even as 125% tariffs took effect.

Trump has referred to his tariff strategy as “Liberation Day,” suggesting it defends American interests. 

Trump said the 90-day pause for most nations reflected their willingness to negotiate, while China’s refusal prompted him to raise tariffs to 125%. 

Beijing responded with an 84% tariff on some US goods, escalating the trade war.

Analysts say the E.U decision to delay its countermeasures shows a willingness to pursue a diplomatic resolution. 

However, what will happen in the US-China trade war in the coming weeks remains uncertain.