Trump Eases EU Tariff Threat Amidst Trade Negotiations

President Donald Trump stepped back from his threat to impose a 50% tariff on imports from the European Union, opting instead to extend the deadline for trade talks until July 9. This came after a discussion with EU Commission President Ursula von der Leyen, who requested more time to finalize an agreement.

The announcement spurred a rally in European markets, with the euro reaching its highest value against the dollar since late April, and key indices like the STOXX 600 and the automobiles index recovering recent losses. Luxury stocks and banks, which are sensitive to U.S. market trends, also saw gains.

Initially, Trump had expressed frustration over the stalled negotiations and recommended the tariffs take effect in June. However, the softened stance leaves room for potential progress, aiming to avert further escalation in the ongoing trade war and mitigate the impact on global financial markets.

(With inputs from agencies.)