Europe sees momentum in US trade talks, but businesses remain uneasy

According to Reuters, the European Union said on Monday that trade discussions with the United States had been given “new impetus” after US President Donald Trump dropped his threat to impose 50% tariffs on EU imports starting June 1.

The White House instead agreed to extend the deadline until July 9, following what Trump described as a “very nice call” with Ursula von der Leyen, head of the European Commission. 

Markets quickly responded. The euro rose to its highest point since late April, while European stocks recovered from Friday’s dip. But on the ground in Europe, companies aren’t rushing to celebrate.

The sudden shift, which came less than 48 hours after Trump called EU trade negotiations “nowhere,” is the latest twist in a standoff that has left many businesses confused about what to expect next.

“They agreed both to fast track the trade negotiations and to stay in close contact,” a spokesperson for the Commission said after Sunday’s phone call. 

Trade reps from both sides were scheduled to meet again on Monday, but no outcomes were expected immediately. “There’s now also a new impetus for the negotiations, and we will take it from there,” the spokesperson added.

Trump’s tariff threats still hang over businesses

On Friday, Trump announced that 50% duties were on the table, accusing the EU of being too difficult. Then, by Sunday, after the call with Ursula, he said, “I agreed to move it. She said we will rapidly get together and see if we can work something out.”

Ursula confirmed it on X, saying she had a “good call” and that Europe was “ready to advance talks swiftly and decisively.” But what’s changed, exactly? Nothing concrete. The underlying disagreement hasn’t gone anywhere.

Michael Pfister, a currency strategist at Commerzbank, pointed out that the EU may very well reach a deal with Washington by July 9, but he questioned whether anything substantial had actually changed since the call. “It is questionable what has changed in terms of the fundamental problems following a phone call,” he said.

Inside Europe, companies say the ongoing uncertainty is hurting business. Gianmarco Giorda, managing director of Italy’s auto parts group ANFIA, said the US tariff threats were another problem in an already difficult market. 

“US duties are an additional source of concern in an already difficult scenario for the Italian automotive industry,” Gianmarco told Reuters.

It’s not just car parts. In Germany, LAPP Group, a family-run business that makes wiring, cables and robotics, said it’s being forced to rethink strategies. CEO Matthias Lapp was direct in his concerns. 

“Unfortunately, current US politics is characterised by unpredictability, individual interests and populism,” he said. “Germany’s good transatlantic relations have been built up over decades of diplomatic work and mutual understanding. However, confidence in their stability is currently suffering massive damage.”

Uncertainty deepens ahead of July deadline

Maros Sefcovic, the EU’s trade chief, spoke with the CEOs of Volkswagen, BMW, Mercedes-Benz, and Stellantis in a video call on Monday. But none of them walked away with clear next steps. No company wants to ramp up production or exports if they’re going to get slammed with a 50% duty next month.

The EU is already paying for trade tension. There’s a 25% US import tariff on European steel, aluminium, and cars. Almost all other goods coming from Europe face a 10% “reciprocal” tariff, which is set to double to 20% when the current 90-day pause runs out in July. The new 50% figure that Trump threw out on Friday would be a whole new level of punishment—if it happens.

But no one actually knows how it would work. The US hasn’t clarified whether the proposed 50% hike would apply to products already covered by existing tariffs. Goods like steel, pharmaceuticals, cars, semiconductors, and lumber are already under investigation or taxed differently. It’s unclear if they would be exempt from this new threat or hit again.