Jonathan Josephs,business reporterand
Nick Edger,business reporter
The European Parliament plans to delay approval of the US tariff agreement agreed in July, according to sources close to the European Parliament’s International Trade Committee.
The suspension will be announced on Wednesday in Strasbourg, France.
The move would mark another escalation in tensions between the United States and Europe as President Donald Trump steps up efforts to acquire Greenland, threatening to impose new tariffs over the issue over the weekend.
The standoff has rattled financial markets and renewed talk of a trade war and possible retaliation for U.S. trade actions.
Stocks on both sides of the Atlantic were lower on Tuesday. European stock markets fell for a second day and the three major U.S. stock indexes fell more than 1% in morning trading.
The value of the U.S. dollar also plummeted in the foreign exchange market. The euro rose 0.8% to $1.1742 against the dollar, and the pound rose 0.2% to $1.346.
The biggest sale of long-term government debt in months has also pushed borrowing costs higher globally, pushing 30-year bond yields higher in markets including the United States, Britain and Germany.
Trade tensions between the U.S. and Europe have eased since the two sides reached an agreement in July at Turnberry Golf Course, Trump’s golf course in Scotland.
The agreement sets U.S. tariffs on European products at 15%, down from the 30% that President Trump had originally threatened as part of a wave of “Liberation Day” tariffs in April. In return, Europe agreed to invest in the United States and make changes to the continent that are expected to boost U.S. exports.
The deal still needs approval from the European Parliament before it can become official.
But hours after Trump threatened US tariffs on Greenland, Manfred Weber, an influential German member of the European Parliament, said “approval is not possible at this stage.”
The EU has put plans to retaliate against US tariffs with its own package targeting 93 billion euros ($109 billion, 81 billion pounds) worth of US goods on hold while the two sides finalize the details.
However, that grace period ends on February 6. That means the EU levy will come into effect on February 7, unless the EU requests an extension or approves a new agreement.
U.S. Treasury Secretary Scott Bessant warned European leaders of retaliation and urged them to keep an open mind at the World Economic Forum in Davos.
“I say to everyone: Sit back, take a deep breath. Don’t retaliate. The president will be here tomorrow and deliver his message,” he said.
The United States has previously expressed impatience with Europe’s progress toward approving the deal amid continued disagreements over technology and metals tariffs.
The United States and the 27-nation European Union are each other’s largest single trading partners, with more than 1.6 trillion euros ($1.9 trillion, 1.4 trillion pounds) of goods and services exchanged in 2024, according to European statistics. This represents almost a third of total world trade.
When President Trump began announcing tariffs last year, it prompted threats of retaliation from many political leaders, including in Europe.
But in the end, many chose to negotiate instead.
Only China and Canada are sticking to their threats to impose tariffs on U.S. goods, with Canada quietly backtracking on such measures in September over fears it would harm its economy.
In a speech in Davos on Tuesday, Canadian Prime Minister Mark Carney called for the “middle powers” to unite to confront what he warned was a formidable world of great power competition.
He warned, “When we only negotiate bilaterally with a hegemon, we negotiate first from our weaknesses. We accept what is presented. We compete with each other to be the most accommodating.” “This is not sovereignty. It is exercising sovereignty while accepting dependence.”
Behind the trade tensions is the pending Supreme Court ruling on whether many of the tariffs announced by President Trump last year are legal.
