The European Union has announced a 90-day suspension of its retaliatory tariffs against the United States. This follows a similar pause by US President Donald Trump on his “reciprocal” tariffs.

European Commission President Ursula von der Leyen said the move is meant to create space for negotiations but warned that countermeasures could return if talks fail.

The EU had initially planned higher duties in response to Trump’s steel and aluminum tariffs from March.

Despite the pause, the US still enforces industry-specific levies. These include 25% tariffs on steel and aluminum exports, 25% on car exports, and a 10% minimum tariff on all imports.

Von der Leyen stressed the need for stability in global trade and warned that unpredictability could hurt investment and growth.

The EU is also working to diversify its trade partnerships while remaining open to talks with the US.

🔗 Source: CNN

🧠 Food for thought

1️⃣ US-EU trade disputes follow predictable cycles of escalation and negotiation

The current tariff standoff mirrors a well-established pattern that has characterized US-EU trade relations for years.

In 2018, President Trump similarly imposed steel and aluminum tariffs on the EU, which responded with retaliatory measures on iconic American products like bourbon and motorcycles 1.

That dispute followed a similar trajectory: tariff announcement, EU retaliation planning, followed by negotiation attempts that temporarily eased tensions while core disagreements remained unresolved 1.

This pattern of escalation followed by negotiation windows has persisted across multiple administrations, though with varying intensity, as evidenced by the $1.4 trillion bilateral trade relationship that has grown by 50% since 2020 despite periodic disputes 2.

The “pause button” approach announced by both sides this week maintains this established rhythm of brinkmanship followed by attempts at resolution, showing how institutionalized this pattern has become in transatlantic economic relations.

2️⃣ Tariffs create substantial economic costs beyond headline revenue figures

While tariffs generate significant government revenue, projected at approximately $400 billion or 1.3% of US GDP, their economic costs are considerably higher and more widespread 3.