Trump "releases good news," Europe has "new ideas," but reports say "key obstacles remain, and the likelihood of reaching a good agreement is still very low."

When Trump began to praise the EU, which he once called "shearing the wool off America", investors sensed a dramatic shift in direction—from a 50% devastating tariff threat to the ultimatum on July 9, this trade game is being pulled back from the brink at an astonishing speed. As a result, U.S. stocks surged, with the S&P 500, Nasdaq, and Russell small-cap stocks briefly soaring over 2% during the session, as the market seemed to bet that Trump would once again concede under pressure from the financial markets.

However, reports indicate that many EU officials and member states still believe that some of Trump's tariffs will remain in place for the long term, and the likelihood of reaching an ideal agreement remains slim. Insiders say that any unilateral U.S. demands that undermine the EU's autonomy in regulatory and tax matters will still be a "red line."

German Finance Minister Lars Klingbeil stated on Monday in Berlin, "We need a quick solution now." He added that he was "cautiously optimistic" about reaching an agreement but emphasized that the EU must respond to U.S. tariff threats in a united, coordinated, and consistent manner.

Dramatic Reversal in Five Days

This thaw in trade relations occurred in just five days.

According to CCTV News, on Friday, May 23, local time, U.S. President Trump stated on social media that he suggested imposing a 50% tariff on the EU starting June 1. According to Xinhua News Agency, President Trump said on the 25th that after a phone call with European Commission President Ursula von der Leyen, he agreed to postpone the start date for the 50% tariff on the EU from June 1 to July 9. Von der Leyen had earlier posted on social media X that she had a "good call" with Trump, but "to reach a good agreement, we need time, until July 9." Von der Leyen stated that the EU is ready to "swiftly and decisively" advance negotiations with the U.S.

In response to Trump's latest remarks, the EU has developed a "new approach" and quickly adjusted its strategic focus. According to insiders, the European Commission will focus its new trade strategy on key areas such as metals, automobiles, pharmaceuticals, semiconductors, and civilian aircraft—industries that have already suffered or are facing U.S. tariff threats In addition, the European Union will continue to work on addressing tariff and non-tariff barriers.

The Real Dilemma Behind the Negotiations

Despite the apparent easing, the prospects for negotiations remain full of uncertainties. According to media reports, U.S. trade deficit data shows that the U.S.-EU trade deficit has doubled this year, primarily driven by the front-loading effect of imports—companies stockpiling goods before tariffs take effect.

The proposal put forward by the EU last week has been rejected by the U.S., which included mutual reductions of tariffs on various goods and cooperation on global challenges and joint investments. Subsequently, Trump threatened to further increase tariffs.

Countermeasures Ready to Launch

The EU is not unprepared. According to media reports, the EU has approved retaliatory tariffs on U.S. goods worth €21 billion ($23.8 billion), which can be implemented immediately, and these tariffs specifically target politically sensitive states.

In addition, the EU is preparing an additional tariff list covering €95 billion worth of U.S. products, targeting industrial goods such as Boeing aircraft, U.S.-made cars, and bourbon whiskey.

The market may be pleased by the temporary easing, but the core logic of Trump's trade game remains unchanged: threats, concessions, and further threats. Whether the six-week time window can resolve this transatlantic trade crisis may not be answered until July 9