Trump's 50% tariff suspension is not the end! The US-EU trade war hides the risk of a "second explosion."

According to the Zhitong Finance APP, analysts warn that although U.S. President Trump has postponed the implementation of a 50% tariff on the European Union, investors still need to "buckle up" to cope with more market volatility, as the risks of a trade war have not been completely eliminated.

Trump announced on Sunday that after a call with European Commission President Ursula von der Leyen, he agreed to delay the implementation of punitive tariffs until July 9.

The U.S. president initially demanded a 50% tariff on EU goods starting June 1 and took to social media to accuse the EU of being "extremely difficult" and stated that trade negotiations with the EU were "making no progress."

European stock markets rebounded and turned positive in early trading on Monday, following a decline on Friday due to Trump's new tariff threats.

Von der Leyen stated on the X platform over the weekend that the EU is "ready to move negotiations forward quickly and decisively." She noted: "The U.S. and EU have the most important and closest trade relationship in the world. To reach a good agreement, we need to make good use of the time before July 9."

EU Trade Commissioner Valdis Dombrovskis later stated on the X platform that he had a "good call" with U.S. Secretary of Commerce Gina Raimondo, and both sides would "stay in continuous contact." However, despite the tariff delay providing breathing room for both sides, market observers warned on Monday that the situation remains full of uncertainties.

Negotiation Strategy Game

Holger Schmieding, chief economist at Berenberg, stated that the six-week window is insufficient to "resolve all the details," but should be enough to reach a framework for a trade agreement.

He said: "This is enough to achieve results similar to the U.S.-UK agreement. It essentially depends on political will, and the U.S. attitude is crucial. If the U.S. truly has the political will, it may ultimately implement a uniform 10% tariff on EU imports, with the EU almost certainly not retaliating and gradually lifting some industry restrictions... Some details can be finalized after July 9."

However, Schmieding pointed out that if a comprehensive tariff of 20%-30% is ultimately imposed on EU goods, "the EU will have no choice" but to implement "significant countermeasures" against the U.S.

He referred to Trump as an "interesting negotiator," believing that he often forces concessions from the other side by creating shock effects, but the EU is unlikely to yield to such strategies. "We must remain calm; the EU must remember that our market size is enormous and economically vital to the U.S. This is a negotiation between equal partners, and the EU is not a region that can be intimidated into submission."

Fog of Negotiation Goals

Guntram Wolff, a senior researcher at Bruegel, stated that despite the extension of the tariff deadline, "huge uncertainty" still exists. "This uncertainty harms the interests of businesses and consumers and is an unnecessary step in negotiations. The biggest obstacle now is that while the EU has proposed multiple solutions, it is still unclear what exactly the U.S. president wants."Wolf believes the EU is "responding appropriately": "The UK has fully accepted various demands, while China is moving in the opposite extreme... ultimately forcing the US to make concessions. The EU is trying to take a middle path."

He added that if the Trump administration really implements high tariffs, the EU is fully capable of retaliating, including leveraging its advantages in pharmaceutical products that are crucial to the US, as well as taking countermeasures in the service sector. "However, the EU has chosen to de-escalate the situation so far. But now it seems that this restraint may no longer be sufficient."

Market Continues to Fluctuate

Naeem Aslam, Chief Investment Officer at Zaye Capital Markets in London, stated on Monday that the delay in tariffs has triggered a "tentative risk appetite rebound," but he, like Wolf, warns that risks remain.

He said: "The US-EU trade game is like a high-risk tango, and July 9 will be the next flashpoint. Although the EU has proposed phased tax reductions and 'mutual respect' negotiations, Trump's 'America First' stance may turn the negotiations into a chaotic battle, impacting supply chains and driving up inflation."

Aslam pointed out that the technology and industrial sectors, in particular, "need to guard against severe fluctuations." "The market will closely monitor every tweet and negotiation rumor, as investors bet on whether this delay is a sincere olive branch or just Trump buying time for a larger tariff showdown. Buckle up, this turbulence is far from over."