European stocks rally 8% as US tariff delay lifts global market sentiment

European markets posted sharp gains on Thursday following a surprise move by US President Donald Trump to postpone a new round of tariffs on dozens of countries, including the European Union.

The announcement, made late on Wednesday, triggered a major rally across global equities, as investors responded to signs of easing trade tensions between two of the world’s largest economic blocs.

With the Eurozone already facing headwinds from slowing growth and supply chain issues, the temporary relief offered by the US decision sent a wave of optimism through financial markets in the region.

Indexes rally across Europe

By 9 am CET on Thursday, European stock markets were firmly in positive territory. Germany’s DAX index climbed 8.37%, while the EURO STOXX 50 rose 8.78%.

France’s CAC 40 advanced 2.27%, the FTSE 100 in London increased 5.96%, and Spain’s IBEX 35 rose 8.10%.

Italy’s FTSE MIB recorded the strongest surge among major bourses with a gain of 10.20%, while Switzerland’s SMI rose 9%.

The euro strengthened by 0.27% against the dollar to $1.09815, and the pound gained 0.38% to trade at $1.28688, reflecting broader investor sentiment in favour of European assets.

EU to expand trade ties

The three-month suspension of tariffs comes after Trump’s announcement last week of a 20% duty on US imports from the European Union.

The proposed tariffs were part of a broader push by the US administration to impose reciprocal trade measures on foreign nations.

The reversal, however, marks a significant shift in tone, particularly towards the EU.

European Commission President Ursula von der Leyen called the pause an important step for global trade stability.

She reiterated the EU’s commitment to engaging with the US on “frictionless and mutually beneficial” trade, noting that predictable conditions are vital for global supply chains.

While the US decision did not affect existing tariffs on key sectors like steel, aluminium, and automobiles, it paused additional duties on a range of imports.

The European Union is still expected to launch countermeasures against the US levies on steel and aluminium starting next week. However, von der Leyen did not comment directly on those plans in her public statements.

Long-term concerns remain

Although the US tariff suspension provided short-term relief to markets, underlying trade tensions remain unresolved.

Trump’s move is seen as part of a broader strategy to increase pressure on China, while temporarily reducing friction with traditional allies.

The paused tariffs had targeted billions of dollars in EU exports, and their suspension is viewed by analysts as a negotiating tactic rather than a permanent policy shift.

The European Union has responded by intensifying its efforts to diversify its trade relationships.

According to von der Leyen, the bloc is engaging with trade partners that collectively account for 87% of global trade, in a bid to reduce reliance on any single country or economic bloc.

She also highlighted the need to improve integration within the EU’s single market.

In her remarks, she pointed to a renewed push by Brussels to lift internal barriers and boost economic cooperation among member states.

Global reaction continues

The US tariff delay came at a crucial time for global markets.

On Wednesday, Wall Street saw major gains, with investors interpreting the announcement as a sign that Washington may be open to negotiations with its trading partners.

That rally continued in Europe on Thursday, with renewed buying interest across sectors.

However, the long-term direction of trade relations between the US and EU remains uncertain.

The suspension is set to expire in three months, and there is no guarantee that discussions during this window will lead to a lasting agreement.

Meanwhile, the EU’s planned countermeasures and the US focus on confronting China could reignite tensions down the road.

As markets continue to respond to developments in US trade policy, the EU appears to be hedging its bets by strengthening internal cohesion and expanding global partnerships—steps that may shape the region’s resilience in future economic shocks.

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