In a move that threatens to escalate tensions between the United States and Europe, the European Parliament is reportedly planning to suspend approval of the tariff deal agreed upon in July. According to sources close to the EU’s international trade committee, the decision is set to be announced in Strasbourg, France on Wednesday.
This development comes as the fallout from President Donald Trump’s efforts to acquire Greenland continue to reverberate. Trump’s threats of new tariffs over the issue have rattled financial markets, reviving fears of a full-blown trade war and the possibility of retaliatory measures against the US.
The July agreement had seen the US lower its tariffs on European goods from 30% to 15%, in exchange for Europe’s commitment to invest in the US and make changes expected to boost American exports. However, the deal still required approval from the European Parliament to become official.
Manfred Weber, an influential German member of the European Parliament, has now stated that “approval is not possible at this stage” in the wake of Trump’s Greenland threats. This marks a significant setback, as the EU had previously put its own plans to retaliate against US tariffs on hold while the negotiations were ongoing.
The reprieve is set to end on 6 February, meaning the EU’s levies will come into force on 7 February unless the bloc moves for an extension or approves the new deal. This has sparked concerns about the potential for a renewed trade conflict between the two economic powerhouses.
Shares on both sides of the Atlantic have been affected by the uncertainty, with European stock markets seeing a second day of losses and the three main US stock indices down by more than 1% in morning trading on Tuesday. The US dollar also fell sharply, with the euro climbing 0.8% against the dollar to $1.1742 and the pound rising by 0.2% to $1.346.
As the European Parliament prepares to make its decision, the situation remains fluid and the potential for further escalation of tensions between the US and Europe looms large. The outcome of this latest development will be closely watched by financial markets and trade experts alike.
