Tariffs dwell: EU pauses counter-tariffs on US items for 90 days however warns Trump over commerce deal

Britain must not just “sit back and hope” but “rise to the moment” in the face of uncertainty over Donald Trump’s tariffs, Sir Keir Starmer has said.

The Prime Minister said the UK should “recognise where our future lies”.

The 10% “baseline” levy on all goods entering America remains in place.

On a visit to Doncaster, Sir Keir said: “I’m not going to stand here and pretend that tariffs are good news. That is not true, and you wouldn’t believe me if I said it, but just as we’ve seen recently on defence and security across Europe, and with Ukraine, they do make one thing very clear, and that is that the world is changing, and we as a country must change with it.

“In other words, we’ve got to rise to the moment here, recognise where our future lies, renew Britain and deliver security for working people.”

Ministers still hope an economic deal with America can be reached.

Chancellor Rachel Reeves will seek to negotiate with the US when she visits Washington at the end of April for the International Monetary Fund’s spring meeting of global finance ministers, she told the Financial Times.

She also said a UK-EU summit on May 19 would be a chance “to refresh our relationship and make it easier for businesses to trade”.

Carsten Brzeski, Global Head of Macro at ING, said he believed Mr Trump’s U-turn was because he considered he had won against China.

He said: “US President Trump has decided on a 90-day reprieve for the “higher reciprocal tariffs” for countries that have not “retaliated” against his announcements from last week. That is, all countries except China.

“Apparently, this shift wasn’t because of the financial market carnage we have been seeing, but Trump declaring “a victory”.

“Given that next to Mexico and Canada, the most important trading partners of the US, China and the EU, have not gone into any negotiations, makes this ‘victory’ look like celebrating a big party when your favourite national soccer team just won against San Marino.

“In all honesty, the current situation is not only chaotic, it’s crazy.”

The euro has rallied against the US dollar following the suspension of tariffs, to stand at $1.11.

China is reaching out to other nations as the US layers on more tariffs in what appears to be an attempt to form a united front to compel Washington to retreat.

Days into the effort, it’s meeting only partial success with many countries unwilling to ally with it.

China has so far focused on Europe, with a phone call between Premier Li Qiang and European Commission President Ursula von der Leyen “sending a positive message to the outside world”.

That was followed by a video conference between Chinese commerce minister Wang Wentao and EU Commissioner for Trade and Economic Security Maroš Šefčovič on Tuesday.

The United States is considering offers from 15 countries on tariff agreements and is close to deals with some of them, White House economic adviser Kevin Hassett says.

The US Trade Representative has said around 15 countries have made explicit offers that “we’re studying and considering and deciding whether they’re good enough to present the president,” Mr Hassett told reporters at the White House.

He said principals in the administration’s trade policy would meet later today to “make sure that the countries that are most important for getting this to the finish line are the countries that we bring in first”.

He said he expected a lot of movement on trade deals in the next three or four weeks. “This is a really, really fast process now that’s not beginning today or yesterday. It began long before,” he said.

“There’s a big inventory of deals that are right close to the finish line,” he told CNBC.

Global shares surged and a manic bond sell-off has eased.

“You’ve had a relief rally after the realisation that market pressure is something that resonates with the US president,” said George Lagarias, chief economist at Forvis Mazars.

European shares pushed higher today. The pan-continental STOXX 600 index was last up 5.3%, on track for its biggest one-day gain since March 2020.

Major indexes in London, Paris and Frankfurt were up between 4.6% and 5.7%.

In Asia, Japan’s Nikkei advanced more than 9%, while a broader gauge of Asia-Pacific stocks excluding Japan rose 4.5%.

German economic institutes on Thursday cut their growth forecast for this year to 0.1 per cent from the 0.8 per cent expected in September, taking into consideration initial US tariffs on steel, aluminium and cars, confirming an earlier Reuters report.

Exports-dependent Germany is the only G7 economy that has contracted for the last two years.

The further “reciprocal” tariffs announced by US President Donald Trump on 2 April and suspended on Wednesday could still deal a major blow to Europe’s biggest economy, the institutes said, possibly “doubling the negative effects”.

This could put Germany on track for a third year of recession for the first time in post-war history.

Trump’s “aggressive trade policy [is] keeping the global economy on tenterhooks,” said Klaus Weyerstrass of the Vienna-based research institute IHS, which contributed to the forecast.

“The additional trade barriers are a significant burden on the global economy … especially because of their unpredictability,” he said.

“Changes to tariffs can occur practically daily, which has increased economic policy uncertainty to an unprecedented degree.”

When, in 1974, President Richard Nixon was forced to resign after lying over a break-in involving planting listening devices at his Democrat rivals’ Watergate Hotel HQ during his re-election campaign, it became the biggest scandal in political history. Now, Donald Trump has found himself in the middle of a political storm that could prove as damaging: Tariffgate.

As markets opened on Wednesday, Trump posted on his TruthSocial platform: “THIS IS A GREAT TIME TO BUY!!!” Hours later, he issued an abrupt U-turn on the reciprocal tariffs he announced on his “Liberation Day” at the start of the month, declaring a “90-day pause” on tariffs for all countries except China.

Markets duly surged – as did social media, with accusations that the president’s “art of the deal” was, in fact, a reverse “pump and dump” whereby stock prices were hammered down and then bought before they rose. The Democrats are calling for an investigation into insider trading. Even Trump himself seemed muddled over when he decided to make this change, telling reporters in the same sentence that it was “over the last few days” and “fairly early this morning”.

Simon Walters writes:

Sweden’s economic growth will be negatively affected by the international conflict over trade tariffs, the country’s finance minister Elisabeth Svantesson has said.

“It’s a given that the growth outlook must be revised down when the next forecast is presented,” Svantesson told reporters after a meeting between government ministers, companies and labour unions on Thursday.

The bond market may have contributed to Donald Trump’s humiliating U-turn on tariffs, White House economic adviser Kevin Hassett has admitted.

However, in the interview with CNBC, Mr Hassett insisted it “did not cause a panic move”.