Trump Holds Back On Tariffs: The EU Breathes Easy And Stocks Rise

A commercial clash that promised to be bloody was narrowly avoided. On the eve of June 1st, Donald Trump and Ursula von der Leyen spoke. A decisive exchange. Result: an additional five weeks of truce before the implementation of American surtaxes on European products. This reprieve was welcomed by the markets. At the opening, European stock markets surged. A breath of fresh air for investors, but a fragile calm.

A spectacular surge in European stock markets after an unexpected call

On Sunday, May 25, Ursula von der Leyen picked up her phone and placed a decisive call . On the line, Donald Trump. The American president, after a week of escalation, grants a delay. Europe obtains until July 9 to continue trade talks.

The EU and the US have the world’s most integrated economic relationship.

Ursula Von der Leyen

This gesture calmed tempers. The next day, European stock markets ignite . The CAC 40 rises by 1.01%, the DAX by 1.44%. The EuroStoxx 50 climbs 1.29%. Even peripheral indices follow. However, London remained closed that day, reducing trading.

In comparison, US futures also rebound: +0.85% for the Dow Jones. The Nasdaq 100 gains 1.19%. In Asia, the trend is mixed. The Nikkei and Kospi rise, while the Hang Seng falls.

European investors regain appetite. The call between Trump and von der Leyen thus froze a trade war. For how long?

Tariff threats that shook the stock market… and Bitcoin

The previous week had been much more turbulent. On April 2, Trump announced “reciprocal” surtaxes of 20%, quickly lowered to 10% for 90 days. Then, he came back at it. On Truth Social, he wrote: “The talks are going nowhere!“

On Friday, May 23, he announced a 50% tariff on all European products starting June 1. Immediate consequence: European stock markets plunged . The CAC 40 lost 2.8%, the DAX fell 2.3%, the Stoxx 600 dropped 1.9%. Banks suffered: Deutsche Bank -5.2%, Société Générale -4.6%. Even luxury and automotive stocks fell. Bitcoin itself wobbled and fell 3.7% in one session.

Nervousness spreads to the bond market: yields on German bunds fall by 10 basis points. Investors flee to safe-haven assets. The Swiss franc gains 0.6% against the dollar. Amid this chaos, the European stock market absorbs the shock, then waits. Sunday’s call changes the game. But the fracture is revealed.

The truce does not erase the sword of Damocles

The tariff threat is simply deferred. Ursula von der Leyen pleaded for more time. She obtained five weeks. But Trump remains unpredictable. In fact, he writes:

I agreed to the extension — July 9, 2025 — It was my privilege to do so.

The market knows that everything can change. Proof: volatility remains high. Bonds are still in high demand. Caution prevails.

Funds flow out of American assets. European equity ETFs have attracted 34 billion euros since January. Conversely, those targeting the United States have received only 8.2 billion. This reversal reflects a profound change in perception.

But nothing is yet certain. Trade discussions are resuming. The euro remains strong, but the dollar falters. Moody’s downgraded the US credit rating , adding to uncertainty. The stock market moves forward on a fragile line.

Some key figures to remember:

• The CAC 40 fell 2.8% on May 23, then rebounded 1.01% on May 27;
• Deutsche Bank lost 5.2% in one session before a partial rebound on Monday;
• The Swiss franc gained 0.6% against the dollar, strengthening its role as a safe haven;
• 34 billion euros invested in European equity ETFs since January;
• The bitcoin price fell 3.7% when Trump’s surtaxes were announced.

Donald Trump granted a reprieve to the European Union until July 9, offering a respite to the markets. However, uncertainty persists, fueled by political and economic volatility. This delay allowed the European stock market to return to the green , also supported by the eagerly awaited Fed decision to maintain rates on May 8. This combination of factors revived investor confidence despite the risks still present. Europe gains time to negotiate, but vigilance remains essential in a tense international context.