Markets Rebound After Trump Delays EU Tariff Hike

U.S. stock futures and European equity markets rallied Monday after former President Donald Trump announced a delay to the planned 50% tariffs on European Union goods, easing immediate trade tensions.

In a Truth Social post on Sunday, Trump said he would postpone the tariff increase from June 1 to July 9 following a phone call with European Commission President Ursula von der Leyen, who requested more time to negotiate a deal. His Friday announcement of the tariff hike had rattled global markets, with the S&P 500 falling 0.6%.

While U.S. markets were closed Monday for Memorial Day, futures signaled strong gains when trading resumes Tuesday. Dow futures rose 450 points, or 1%, to 42,124. S&P 500 futures climbed 1.2% to 5,888, and Nasdaq-100 futures gained 1.4% to 21,272.

European stocks rebounded from Friday’s losses. The Stoxx Europe 600 rose 1%, offsetting its 0.9% drop in the previous session—its worst since April 9. Germany’s DAX surged 1.7%, and France’s CAC 40 advanced 1.1%.

The euro edged up 0.1% to $1.1384, while the 10-year German bund yield increased by 3 basis points to 2.602%, amid broad dollar weakness.

“The EU is the U.S.’s largest trading partner, and renewed tensions could spark a broader risk-off sentiment,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. She noted the euro is attracting haven flows as uncertainty rises.

Analysts warn that the risk of further tariffs could shake investor confidence heading into the summer. “June could be a rocky month for markets, with the U.S. working to avoid retaliatory tariffs through global trade talks,” said Jochen Stanzl, chief market analyst at CMC Markets.

The EU had already faced a 10% tariff following Trump’s April 2 “liberation day” trade policy. Friday’s proposed hike to 50% briefly threatened to escalate the standoff before the delay was confirmed.

Von der Leyen described her conversation with Trump as “good,” posting on X that the extension to July 9 would give both sides time to work toward a deal.

Trade uncertainty is also impacting U.S. businesses. Minneapolis Fed President Neel Kashkari told Bloomberg TV on Monday that companies want clarity before making investment decisions. He added that upcoming trade outcomes could influence Fed policy, alongside inflation and labor data. The CME FedWatch tool currently shows a 58% probability of a September rate cut.

European stocks have drawn more interest from Wall Street this year. The Stoxx Europe 600 is up 8.3%, while the S&P 500 is down 1.3%. Still, Citigroup analysts cautioned that a lasting 50% tariff could cause the European index to drop by 7% to 8%.

Goldman Sachs economists, led by Guillaume Jaisson, forecast flat GDP growth for the eurozone in 2025, warning that renewed trade friction could further strain the region’s weak economic outlook.

“Investor flows into European equities have improved, but remain relatively light,” Jaisson said. “While domestic interest is rising, positioning is still cautious.”