Trump "releases good news" and Europe has "new ideas", but reports say "key obstacles are still there, and the possibility of a good deal is still small"

**Source: Wall Street Journal**  

**When Trump Praised the EU He Once Called "Freeloaders," Investors Smelled a Dramatic Shift**  

When Trump began praising the European Union—an entity he once accused of "taking advantage of the U.S."—investors sensed a sharp turn in the wind. From the threat of devastating 50% tariffs to a July 9 ultimatum, this trade standoff is being pulled back from the brink at astonishing speed. In response, U.S. stocks surged, with the S&P 500, Nasdaq, and Russell 2000 all briefly jumping over 2% intraday, as markets appeared to bet on Trump once again backing down under financial market pressure.  

However, reports suggest many EU officials and member states still believe some Trump tariffs will remain long-term, with the likelihood of an ideal deal remaining slim. Insiders say any U.S. unilateral demands that weaken EU autonomy in regulatory or tax matters will remain a "red line."  

German Finance Minister Lars Klingbeil stated Monday in Berlin: *"We need quick solutions now."* While expressing *"cautious optimism"* about reaching a deal, he stressed the EU must respond to U.S. tariff threats *"with unity, coordination, and consistency."*  

### **A Dramatic Reversal in Five Days**  

This thaw in trade relations unfolded in just five days.  

On Friday, May 23, Trump announced on social media that he planned to impose 50% tariffs on the EU starting June 1. By Sunday, May 25, after a call with European Commission President Ursula von der Leyen, he agreed to delay the tariffs until July 9. Von der Leyen called it a *"good conversation"* but emphasized that *"to reach a good deal, we need time—until July 9."* She added the EU was ready to move *"swiftly and decisively"* in negotiations.  

Faced with Trump’s latest stance, the EU quickly adjusted its strategy. Insiders reveal the European Commission will focus new trade efforts on key sectors like metals, autos, pharmaceuticals, semiconductors, and civil aircraft—industries already hit or threatened by U.S. tariffs. Beyond this, the EU remains committed to addressing both tariff and non-tariff barriers.  

### **The Reality Behind the Negotiations**  

Despite surface-level easing, the path forward remains uncertain. Media reports indicate the U.S. trade deficit with the EU has doubled this year, driven largely by stockpiling ahead of expected tariffs.  

An EU proposal last week—which included mutual tariff reductions and cooperation on global challenges—was rejected by the U.S., prompting Trump to threaten even higher tariffs.  

### **Retaliation at the Ready**  

The EU is not unprepared. Reports show it has already approved retaliatory tariffs on €21 billion ($23.8 billion) of U.S. goods, which could be imposed immediately—with targets carefully chosen to hit politically sensitive U.S. states.  

Additionally, the EU is preparing a second list covering €95 billion in U.S. products, including Boeing aircraft, American-made cars, and bourbon whiskey.  

While markets may cheer the temporary reprieve, the core logic of Trump’s trade gambit remains unchanged: threaten, retreat, and threaten again. Whether this six-week window can resolve the transatlantic trade crisis will only become clear by July 9.  

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