Trump tariffs: EU pauses countermeasures until July

US Treasury Secretary Scott Bessent has said there was no reason that a deal could not be done with China, in an apparent olive branch as the two economic powerhouses trade tariff threats.

"There's a big deal to be done at some point" Bessent responded to a question from Bloomberg TV on whether the two countries' economies could uncouple. "There doesn't have to be" decoupling, he added, "but there could be."

Speaking while on a trip to Argentina, Bessent said a deal with China would be more difficult than with other nations because "China is both our biggest economic competitor and our biggest military rival."

He also warned that the tariffs were "not a joke. I mean these are big numbers. I think no one thinks they're sustainable, wants them to remain here, but it's far from a joke."

The world's two largest economies levied tit-for-tat tariffs on each other since US President Donald Trump launched global tariffs, that has particularly targeted Chinese imports.

Levies imposed by the US on China were raised to 145%, while Beijing set a retaliatory 125% band on US imports.

Over the weekend, the US listed tariff exemptions for smartphones, laptops, semiconductors and other electronic products for which China is a major source, in what seemed to be a climb down from the escalation.

However, Trump and some of his top aides said Sunday that the exemptions had been misconstrued and would only be temporary as his team pursued fresh tariffs against many items on the list. 

EU Trade Commissioner Maros Sefcovic traveled to Washington DC on Monday for talks with US counterparts in hopes of avoiding disaster in President Donald Trump's on-again-off-again trade war.

The EU has prepared responses to the original tariff threats leveled by Trump but said it would pause these after Trump backed off his maximalist global tariff threat.

Now, the EU has announced that a 90-day pause will officially go into effect on Tuesday. 

The European Commission has said, "The EU considers US tariffs unjustified and damaging, risking economic harm to both sides, as well as the global economy."

Sefcovic's mission is to reach an agreement before the 90 days are up. He said the EU remains "constructive, and ready for a fair deal — including reciprocity through our zero-for-zero tariff offer on industrial goods and the work on non-tariff barriers."

"Acheiving this," said the EU commissioner, "will require a significant joint effort."

The European Commission on Monday said it would hold off on retaliatory tariffs on US goods worth €21 billion until July 14 "to allow time and space for EU-US negotiations." 

The EU's pause will "take legal effect" on Tuesday, the European Commission said in a press statement. 

EU Commission chief Ursula von der Leyen said the bloc would suspend the countermeasures last week, and Monday's announcement makes it official. 

The measures had been in response to US President Donald Trump's tariffs on EU steel and aluminium imports announced in February. 

Trump also slapped a 20% universal tariff on EU goods, as part of his sweeping "reciprocal" tariff announcement on April 2.

The EU has not yet announced countermeasures to that planned tariff regime, and has said it prefers to avoid retaliation.

On April 9, hours after the universal tariffs went into effect, Trump said the levies for most countries would be paused for 90 days. This included all universal tariffs impacting the EU.

EU trade commissioner Maros Sefcovic is in Washington Monday for talks with US counterparts to take steps towards hammering out an agreement before the 90 days expire. 

"The EU considers US tariffs unjustified and damaging, risking economic harm to both sides, as well as the global economy," the commission said.

The United States and the European Union are making enormous progress in trade talks, White House economic adviser Kevin Hassett said.

"There have been a lot of discussions with the EU," Hassett, director of the National Economic Council, told Fox Business Network. "We're making enormous progress. It's going to be very good for American workers, especially American auto workers," he added.

US President Donald Trump also targeted the European Union when he announced sweeping tariffs on US trading partners on April 2.

Trump, however, made a climbdown last week and declared a 90-day pause in the implementation of higher duties on many countries, leaving just a global baselines 10% tariff intact.

Following Trump's tariff reprieve, Brussels decided to delay its own retaliation plans, opening the door for talks between the US and the EU.  

Chinese exports soared higher than expected in March, according to data released on Monday, as businesses rushed to release goods before Trump's staggering tariffs kicked in. 

Exports jumped 12.4% when compared to March of 2024. This was more than double the 4.6% rise expected by experts surveyed by Bloomberg. 

Meanwhile imports fell 4.3% year-on-year, an improvement on the first two months of the year, which signals that consumption in China may be on a rebound.

"At present, China's exports are indeed facing a complex and severe external situation, but the sky will not fall down," Lyu Daliang, a spokesman for the General Administration of Customs, said in a news conference after the data was released.

However, analysts said the export is likely to take a hit as businesses feel the pressure from the tariffs.

"The strong export data reflect front-loading of trade before the US tariffs were announced," Zhiwei Zhang, head of Pinpoint Asset Management said in a note. "China's exports will likely weaken in coming months as the US tariffs skyrocket," he said, adding that uncertainty was extremely high. 

Julian Evans-Pritchard, head of China economics at Capital Economics also expects shipments to "drop back" over the coming months. "It could be years before Chinese exports regain the current levels," he said in a note to investors.

Chines leader Xi Jinping has arrived in Vietnam for the first leg of his Southeast Asia tour. With his arrival, came his warning: protectionism "leads nowhere."

A line of well-wishers stood outside the airport waving Chinese flags as Xi gears for a meeting which Beijing says will bear "major importance" for the region.

Upon arrival, Xi said he looked forward to an "in-depth exchange of views with Vietnamese leaders on issues concerning ties between the two parties and countries that have a global impact," Chinese state news agency Xinhua reported.

Japanese Prime Minister Shigeru Ishiba told the country's parliament on Monday that US tariffs have the potential to disrupt the world economic order and that the nation must seek common ground with the US.

"I am fully aware that what's happened so far has the potential to disrupt the global economic order," Ishiba told the parliament.

"In negotiating with the United States, we need to understand what's behind Trump's argument both in terms of the logic and the emotional elements behind his views," he said.

The leader added that the government was not looking to issue a supplementary budget at the moment but will remain ready to cushion the economic blow from Trump's tariffs. 

On Thursday, Tokyo and Washington will start bilateral trade talks which will also cover tariffs and non-tariff barriers to exchange rates. The talks are likely to happen between Japanese Finance Minister Katsunobu Kato and US Treasury Secretary Scott Bessent. 

Economic Revitalization Minister Ryosei Akazawa will also visit Washington for the negotiations this week, Prime Minister Shigeru Ishiba told lawmakers. 

"As some tariffs have already taken effect, Japanese companies' profits are being cut day by day," Akazawa said in parliament on Monday.

"The sooner (the issue is addressed), the better," he said. "I will do my best, bearing in mind what's best for our national interests and what is most effective," he said.

Japan is facing a 24% tariff on goods exported to the US, along with a 25% tariff on automobiles which took affect in April.

Chinese President Xi Jinping reiterated China’s position on US President Donald Trump’s trade war, in an article published in Vietnam’s Communist Party newspaper Nhandan on Monday.

"There are no winners in trade wars and tariff wars, and protectionism has no way out," he wrote.

The piece was published ahead of Xi’s arrival in Hanoi, Vietnam as he kicks off a three-nation tour to Southeast Asia. 

While the visit has been planned for weeks, it comes as Beijing faces a 145% tariff on its goods exported to the US and has in turn imposed a 125% tariff on the US. 

The Chinese President called for stronger ties with Vietnam, a key manufacturing hub in the region which exports a majority of its goods to the US. Hanoi is facing a 46% US customs duty which will come into effect in July, but is in negotiations with Washington for a reduction.

On the other hand, it imports most of its goods from China. Hanoi is working on increasing the added value on imports to justify the ‘Made in Vietnam’ tag, under pressure from Washington.

Vietnam's customs data show a long-term trend in which imports from China closely mirror the value and swing of exports to Washington.

"The two sides should strengthen cooperation in production and supply chains," Xi said, urging more trade and stronger ties with Hanoi on artificial intelligence and the green economy as well. 

Asian stocks rose as investors were partially tempered by Trump's weekend announcement of an exemption of tariffs on electronics.

In Tokyo, the Nikkei 225 Index was up 1.6% while in Hong Kong, the Hang Seng Index rose 2.4%. The Shanghai Composite Index also rose 0.8% on Monday morning. Stocks in Sydney, Seoul, Singapore, Taipei and Manila also went up.

The slight relief comes after extreme market volatility seen last week in the wake of the US President's tariff flip-flops and counter-tariffs by China.

However, Trump dampened the rebound, saying the exemptions had been misconstrued. He wrote on his Truth Social platform that "NOBODY is getting 'off the hook'... especially not China which, by far, treats us the worst!" He said he would announce new tariffs on semiconductors "over the next week".

The US dollar extended its losses against major currencies with the Euro at a three-year high and the Swiss Franc at its strongest in 10 years. 

In a clear sign of ongoing investor trepidation, gold hit a new peak of $3,245.75 on Monday.Gold is a go-to asset in times of uncertainty, but the weak dollar has also helped its rising value. 

Boston Federal Reserve's chief Susan Collins told the Financial Times that officials would "absolutely be prepared" to deploy various tools to help stabilize the financial markets if required.

US President Donald Trump said he does not think a foreign company should control US Steel, repeating his views on the $15 billion bid by Japan's Nippon Steel to buy the US firm.

He made the comments to reporters on Air Force One late on Sunday as he returned from his Florida estate to the White House.

On Wednesday, Trump had said he did not want to see US Steel "go to Japan," sending the company's shares down 7%. 

In February, Trump and Japanese Prime Minister Shigeru Ishiba met in person and discussed the deal.

"The difference between acquisition and investment must be carefully examined in light of the US law, but there must surely be a point where it (US Steel) remains as an American company, and where Japanese interests can also be realized," Ishiba said in a parliament session.

The deal between Nippon Steel and US Steel, first announced in December 2023, has faced headwinds from the beginning. Even former US President Joe Biden asserted that US Steel should remain American-owned.

The fallout and reaction to the global tariff war initiated by Donald Trump continues this week as leaders try to reason with the US President or negotiate for a lower customs duty. 

Chinese President Xi Jinping arrived in Vietnam on Monday on the first leg of a three-country tour to Southeast Asia. After Hanoi, he will travel to Cambodia and Malaysia, which are facing US duties of 49% and 24%, respectively, and have already begun reaching out to Washington.

Over the weekend, Washington said smartphones, computers and other electronic goods entering the US were to be exempted from the tariffs imposed by the Trump administration on imports. China said the step was a "small" one in correcting Trump's "wrong practice" of imposing tariffs.