EU to suspend approval of US tariff agreement

The European Parliament plans to suspend approval of the US tariff deal.

The European Parliament plans to suspend approval of the US tariff deal agreed in July, according to sources close to the International Trade Committee.

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

This move would signify an additional escalation in tensions between the US and Europe, as Donald Trump intensified his efforts to annex Greenland and threatened new tariffs related to this issue over the weekend.

The standoff has spooked financial markets, reigniting talk of a trade war and raising the possibility of retaliation against US trade measures.

Stocks on both sides of the Atlantic were lower on Tuesday, with European stock markets seeing a second day of decline and the three main US stock indexes falling more than 1% in morning trading.

The US dollar also declined heavily in the currency market. Against the dollar, the euro rose 0.8% to $1.1742, while the pound rose 0.2% to $1.346.

Borrowing costs also rose around the world, as the biggest selloff of long-term government debt in months pushed yields on 30-year bonds higher in markets including the US, Britain and Germany.

Trade tensions between the US and Europe eased after the two sides reached an agreement at Trump’s Turnberry golf course in Scotland in July.

That agreement set U.S. tariffs on European goods at 15%, less than the 30% that Trump had initially threatened as his “share”. Liberation Day” Wave of tariffs in April. In return, Europe agreed to invest in the US and make changes to the continent in hopes of boosting US exports.

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

But on Saturday, within hours of Trump’s threat of US tariffs on Greenland, Manfred Weber, an influential German member of the European Parliament, said, “Ratification is not possible at this stage.”

The EU had halted plans to retaliate against US tariffs by targeting €93bn ($109bn, £81bn) worth of US goods with its own package while the two sides finalised details.

But that exemption expires on February 6, meaning the EU levy will come into effect on February 7 unless the bloc moves to extend or approve a new deal.

Speaking at the World Economic Forum in Davos, US Treasury Secretary Scott Besant reiterated his warning to European leaders against retaliation and urged them to “keep an open mind”.

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

The US has earlier expressed impatience over European progress towards approving the deal amid ongoing disagreements over technology and metals tariffs.

The US and the 27-nation EU are each other’s biggest trading partners, with more than €1.6tn ($1.9tn, £1.4tn) of goods and services exchanged in 2024, according to European data. It represents about one third of all global trade.

When Trump began announcing tariffs last year, many political leaders, including in Europe, issued threats of retaliation.

However, eventually, many chose to negotiate instead.

Only China and Canada stuck to their threats to impose tariffs on American goods, with Canada quietly withdrawing those measures in September over concerns they were hurting its economy.

In a speech in Davos on Tuesday, Canadian Prime Minister Mark Carney urged “middle powers” to unite against the brawling world of great power rivalry that he warned was emerging.

He warned, “When we negotiate bilaterally with only one hegemon, we negotiate with weakness.” We accept what is offered. We compete with each other to be the most favourable.” “This is not sovereignty. This is a display of sovereignty while accepting subordination.”

The trade tensions come against a backdrop of the Supreme Court pending a decision on whether several tariffs announced by Trump last year are legal.