US President Donald Trump has postponed the planned 50% tariffs on European Union goods from June 1 to July 9. This decision came after a phone call with European Commission President Ursula von der Leyen, who requested more time to engage in serious trade negotiations.
Trump described the call as “very nice” and said von der Leyen expressed a strong desire to start talks quickly. He called the extension a “privilege” and agreed to delay the tariffs to allow negotiations to proceed.
Prior to this, Trump had criticized the EU for not negotiating in good faith and threatened the high tariffs to pressure the bloc. The original plan included a 20% reciprocal tariff announced in April, which was now set to be replaced by the 50% tariff if no deal is reached by July 9.
The announcement affected markets on Friday, with European stocks dropping 2% and US indexes falling up to 1%. German government bonds rallied as investors increased bets on European Central Bank rate cuts.
The US dollar weakened, with the trade-weighted dollar index falling from 99.89 to 99.11, and EUR/USD rising from 1.1281 to 1.1362, reflecting investor skepticism about Trump’s aggressive stance[original article].
Following the tariff extension, risk sentiment improved on Monday. European equity futures and German bond yields reversed some of Friday’s losses. The EUR/USD pair continued its upward trend, surpassing 1.14. However, market volumes were low due to holidays in the UK and US, making it too early to draw firm conclusions. Analysts advise caution and maintain a negative outlook on the dollar[original article].
In other news, Moody’s upgraded Italy’s credit outlook from stable to positive, citing improved fiscal performance and a stable political environment. Italy’s budget deficit narrowed to 3.4% in 2024, better than expected, and is projected to decline further. Despite a high debt ratio, Italy’s strong economy and governance support its credit profile.
Meanwhile, European officials are optimistic that Bulgaria will soon meet the criteria to adopt the euro. Inflation was the last major hurdle after the Russian invasion caused price spikes. The European Commission and ECB are finalizing their convergence report, expected in early June. If approved by EU leaders in June, Bulgaria could join the eurozone by early 2026.
