EU suspends approval of US tariff deal

The European Parliament is planning to suspend approval of the U.S. tariff deal reached in July, according to sources close to the European Parliament’s international trade committee.

The suspension will be announced on Wednesday in Strasbourg, France.

The move would mark another escalation in tensions between the United States and Europe, with Donald Trump stepping up efforts to acquire Greenland and threatening new tariffs over the weekend over the issue.

The standoff roiled financial markets and reignited discussions about a trade war and the possibility of U.S. retaliation over its trade measures.

Stock markets were lower on both sides of the Atlantic on Tuesday, with European stocks falling for a second day in a row and all three major U.S. stock indexes falling more than 1% in early trading.

In currency markets, the U.S. dollar also fell sharply. The euro rose 0.8% to $1.1742 and sterling rose 0.2% to $1.346.

Borrowing costs have also risen around the world, with the biggest sell-off in long-term government debt in months pushing up yields on 30-year bonds in markets including the United States, Britain and Germany.

Trade tensions between the United States and Europe have eased since July when the two sides reached a deal at Trump’s Turnberry golf course in Scotland.

The deal sets U.S. tariffs on European goods at 15%, down from the 30% Trump initially threatened.liberation day“The tariff wave in April. In exchange, Europe agreed to invest in the United States and implement reforms on the continent that are expected to boost U.S. exports.”

The deal still needs approval from the European Parliament to become official.

But on Saturday, within hours of Trump threatening U.S. tariffs on Greenland, Manfred Weber, an influential German member of the European Parliament, said approval was “impossible at this stage.”

The EU has shelved a package of 93 billion euros ($109 billion, £81 billion) worth of American goods in retaliation for U.S. tariffs while the two sides hammer out details.

But this reprieve will end on February 6, meaning the EU tax will come into effect on February 7 unless the EU proposes an extension or approves a new deal.

Speaking at the World Economic Forum in Davos, U.S. Treasury Secretary Scott Bessant reiterated his warning to European leaders against retaliation, urging them to “keep an open mind.”

“I tell everyone, sit down. Take a deep breath. Don’t retaliate. The president will be here tomorrow and he will get his message across,” he said.

The United States has has previously expressed impatience with the progress of European approval of the deal. Disagreements persist over technology and metals tariffs.

According to European data, the United States and the 27-country European Union are each other’s largest single trading partners, with trade in goods and services expected to exceed 1.6 trillion euros ($1.9 trillion, 1.4 trillion pounds) in 2024. This accounts for nearly one-third of global trade.

When Trump began announcing tariffs last year, many political leaders, including those in Europe, threatened retaliation.

But in the end, many chose to negotiate.

Only China and Canada have persisted with their threats to impose tariffs on U.S. goods, with Canada quietly withdrawing the measures in September over concerns they would harm its economy.

Speaking in Davos on Tuesday, Canadian Prime Minister Mark Carney urged “middle powers” to unite against the emerging world of great power competition in which might makes right.

“When we only negotiate bilaterally with a hegemon, we negotiate from a place of weakness. We accept the terms that are offered. We compete with each other to be the most tolerant,” he warned. “This is not sovereignty. This is exercising sovereignty while accepting submission.”