What's Happening?
The European Parliament is set to suspend the approval of a US tariffs deal that was agreed upon in July, according to sources close to its international trade committee. This decision is expected to be announced in Strasbourg, France. The suspension
comes as tensions between the US and Europe escalate, particularly following President Trump's recent threats to impose new tariffs over the issue of acquiring Greenland. The financial markets have reacted negatively, with stock indices on both sides of the Atlantic experiencing losses. The US and the European Union are significant trade partners, exchanging goods and services worth approximately $1.9 trillion in 2024. The initial agreement had reduced US tariffs on European goods to 15% from a previously threatened 30%, with Europe agreeing to invest in the US and make changes to boost US exports. However, the deal requires European Parliament approval to become official.
Why It's Important?
The suspension of the tariffs deal approval highlights the fragile nature of international trade agreements and the potential for escalating trade tensions to impact global markets. The US and EU are major trade partners, and any disruption in their trade relations could have significant economic repercussions. The suspension could lead to retaliatory measures from the EU, which had previously paused plans to impose tariffs on $109 billion worth of American goods. This development underscores the ongoing challenges in US-EU trade relations, particularly in the context of President Trump's aggressive trade policies. The uncertainty surrounding the deal could affect businesses and consumers on both sides, potentially leading to higher prices and limited availability of goods.
What's Next?
If the European Parliament does not approve the deal, the EU's previously suspended tariffs on American goods could come into effect on February 7, unless an extension is granted or the deal is approved. US Treasury Secretary Scott Bessent has urged European leaders to avoid retaliation and keep an open mind, emphasizing the importance of dialogue. President Trump is expected to address the issue at the World Economic Forum in Davos, which could influence the next steps in the negotiations. The outcome of these discussions will be crucial in determining the future of US-EU trade relations and the potential for further economic disruptions.
