“Buckle Up — Trump’s EU Tariff Delay Offers No Certainty as Trade Tensions Loom, F.M.I.E Sources Warn”
Key Points
- U.S. President Donald Trump initially proposed a 50% tariff on EU imports starting June 1, but has postponed implementation to July 9.
- European markets bounced back early Monday after falling on Friday amid renewed tariff threats.
- Analysts warn that despite the delay, the risk of a full-blown trade clash remains high.
F.M.I.E Sources report that global markets may have gotten a brief reprieve, but investors are being urged to remain cautious as President Donald Trump’s tariff threats toward the European Union remain unresolved. While Trump announced a delay to the proposed 50% tariffs — now set to begin July 9 — analysts emphasize that this is by no means an indication that tensions are easing.
The tariff rollout was initially scheduled for June 1, following Trump’s accusations that the EU has been “very difficult to deal with” and that trade negotiations are “going nowhere.” His announcement followed a phone call with EU Commission President Ursula von der Leyen, who emphasized the need for additional time to reach a meaningful deal, stating that the EU is “ready to advance talks swiftly and decisively.”
Markets reacted positively to the delay, with European stocks rebounding Monday morning after dipping on Friday. European Trade Commissioner Maros Sefcovic also shared that he had constructive discussions with U.S. Commerce Secretary Howard Lutnick and vowed to remain in close contact.
However, F.M.I.E analysts caution that underlying risks remain significant.
Chief Economist Holger Schmieding told F.M.I.E that while the extension provides a six-week window for negotiations, it may not be long enough to resolve every detail. “It could be sufficient to agree on a framework,” Schmieding said, comparing it to a streamlined deal similar to one previously discussed between the U.S. and U.K.
Schmieding also suggested that if the U.S. imposes a blanket tariff of 10%, with limited EU retaliation and sector-specific adjustments, the worst could be avoided. However, should tariffs rise to 20–30%, he warned, “The EU would have no choice but to respond with serious countermeasures.”
He described Trump as “an interesting negotiator,” using shock tactics to pressure counterparts into making concessions — a strategy unlikely to work with the EU. “The European Union can’t be intimidated into surrender. We must remember the EU is an economic power in its own right,” he stated.
Uncertainty Still Clouds Talks
Guntram Wolff, senior fellow at Bruegel, told F.M.I.E that the biggest problem now is a lack of clarity about what the Trump administration actually wants. “Massive uncertainty lingers. It’s bad for business and bad for consumers,” he said, calling the delay an “unnecessary step.”
He praised the EU’s response so far, which he said has been balanced. “Unlike the U.K., which gave in to several demands, or China, which retaliated aggressively, Europe is holding the middle ground,” Wolff explained.
The EU does have tools at its disposal to retaliate, especially in key sectors like pharmaceuticals and services, but has so far avoided escalation. “However, that may not be sustainable,” Wolff warned.
July 9: The Next Flashpoint
Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, told F.M.I.E that the market saw a “tentative risk-on rally” following the delay — but warned the relief may be short-lived.
“Looking ahead, the EU-US trade dance is a high-stakes tango,” Aslam said. “The EU is offering phased tariff cuts and constructive dialogue, but Trump’s America-first posture could derail talks entirely.”
He added that sectors like tech and industrials are on edge. “Investors are watching every headline, tweet, and whisper. Whether this delay is a genuine olive branch or just Trump preparing for a bigger showdown remains to be seen.”
“Buckle up — this ride’s far from over,” Aslam concluded.
Source: F.M.I.E Means Business Intelligence Reports