European Parliament Puts a Stop to Important US Trade Deal
The European Parliament put a stop to the approval of a big trade deal between the US and Europe that was reached last summer. The decision was made public in Strasbourg while President Donald Trump was speaking in Davos. Lawmakers said that Trump’s demand to buy Greenland had made tensions rise.
The suspension shows that people are more worried that trade relations between Europe and the US will become more confrontational instead of cooperative. European officials said that trust had been lost because of new threats to tariffs. The move shows that they are willing to use institutional power to fight against one sided pressure.
Source: BBC/Website
Greenland Dispute Reignites Transatlantic Trade Tensions
European governments and markets were worried when Trump pushed again to take control of Greenland. The proposal brought back fears that diplomatic norms would break down on a larger scale. After weeks of inflammatory language, trade tensions rose quickly.
European leaders thought that the Greenland issue went too far politically. Concerns went beyond sovereignty to include behavior that set a bad example. The argument quickly spread to talks about trade and the economy.
Turnberry Deal Conditions Now Put On Hold
The deal that is now on hold was made last July at Trump’s Turnberry golf course in Scotland. It cut the proposed US tariffs on European goods from 30% to 15%. In exchange, Europe agreed to change its policies to help US exports and increase investment.
Even though the politicians agreed, the plan still needed to be approved by parliament. Trump’s most recent threats about tariffs messed up that process. Lawmakers in Europe said they could no longer go ahead under pressure.
Recommended Article: Cost Strains Keep UK Small Business Confidence Low
EU Warns Of Retaliatory Tariffs And Trade Measures
The suspension made it possible for the EU to retaliate against American goods again. Brussels had already set tariffs on US imports worth €93 billion. While trade talks were going on, those steps were put on hold.
If they are not extended again, the tariffs that are meant to punish could go into effect in early February. European officials also talked about the anti coercion tool. This mechanism lets you quickly fight back against economic threats.
Trump Backs Off Tariffs After Nato Discussions
Trump said a deal was reached on a framework for Greenland just hours after the announcement of the suspension. He also gave up on his plans to put new tariffs on some NATO members. The change came after talks with NATO leaders.
The decision calmed the nerves of both sides of the Atlantic right away. Officials in Europe were careful and showed doubt instead of relief. A lot of people thought the retreat would happen.
Markets Respond To Reduced Trade War Fears
After Trump said he would stop threatening tariffs, the stock market went up. During the afternoon, major US stock indices went up by more than 1%. After days of ups and downs, European markets also stabilized.
Precious metals kept going up as investors stayed careful. Gold hit an all time high, and silver stayed close to its recent highs. Even though the rhetoric was calmer, safe haven demand showed that there was still uncertainty.
Uncertainty Persists Over Future Trade Cooperation
European leaders said it would take time to look over Trump’s plan for Greenland. Leaders of Parliament would not say if the trade deal could be saved. Trust in long term cooperation is still weak.
Trump said again that he wanted to buy Greenland, but he said he would not use force. EU officials are still wary of using more pressure tactics. The episode shows how geopolitical conflicts are making trade relations between countries worse.
