(qlmbusinessnews.com . Wed 21st Jan, 2026) London, UK —
EU-US Trade Relations Strained as Tariff Approval Faces Postponement
The European Parliament is poised to delay the approval of a tariffs agreement with the US finalised in July, sources affiliated with its international trade committee have disclosed.
This declaration is expected to be made public in Strasbourg, France, come Wednesday.
The postponement signals an intensification of the already strained relations between the US and Europe, amid President Donald Trump's endeavours to annex Greenland, coupled with his recent threats to impose new tariffs over this agenda.
The ongoing tensions have unsettled global financial markets, fuelling speculations of a looming trade conflict and potential retaliatory measures against the US for its trade policies.
European and American stock markets endured losses on Tuesday, marking a second consecutive day of downturns. Midday figures showed the Dow Jones Industrial Average falling by 1.3%, with the S&P 500 and Nasdaq experiencing 1.5% and 1.7% declines, respectively.
In the currency arena, the US dollar saw a significant dip. The euro gained 0.7% against the dollar, hitting $1.1731, while the British pound appreciated by 0.2%, reaching $1.346.
Worldwide, borrowing costs have surged as a vast sell-off of long-term government bonds in recent months pushed up yields on 30-year bonds across markets in the US, UK, and Germany.
Trade relations between the US and Europe had shown signs of improvement following a July deal struck at Trump's Turnberry golf course in Scotland, which reduced US levies on European goods from the initially threatened 30% to 15%. In return, Europe consented to invest in the US and implement changes likely to enhance US exports.
However, for this agreement to be enacted, it requires the European Parliament's endorsement.
This process hit a snag when, following President Trump's tariff threats over Greenland, Manfred Weber, a prominent German member of the European Parliament, asserted that “approval is not possible at this stage”.
The EU had temporarily halted its plans to impose its own tariffs on $109bn (£81bn) worth of US goods while finalising the deal's specifics.
But this grace period ends on 6 February, setting the stage for EU tariffs to be applied on 7 February unless the bloc decides to extend or ratify the new agreement.
French President Emmanuel Macron has called on the EU to weigh its retaliatory options, including the deployment of an “anti-coercion instrument”, informally dubbed the “trade bazooka”.
In response to mounting US tariffs, which he deemed “fundamentally unacceptable”, especially when employed as leverage against territorial sovereignty, Macron voiced his concerns during his address at the World Economic Forum in Davos.
From the American side, at the same Davos event, US Treasury Secretary Scott Bessent urged European leaders to refrain from retaliation and to “keep an open mind”.
Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer issued a stern warning that the US would respond to any retaliatory measures.
Trade between the US and the 27-member European Union constitutes the largest bilateral partnership globally, with over €1.6tn ($1.9tn, £1.4tn) in goods and services exchanged in 2024, embodying nearly a third of all international trade.
As tariffs announced by Trump last year provoked threats of retaliation globally, Europe, amongst others, chose negotiation over confrontation, contrasting China and Canada's initial stance of implementing counter-tariffs, with Canada later retracting most of these measures to protect its economy.
Canadian Prime Minister Mark Carney, speaking in Davos, encouraged “middle powers” to band together against the dominant force politics now shaping international relations, advocating for unity as opposed to negotiation from a position of weakness.
Amid these trade tensions, a Supreme Court decision on the legality of many tariffs announced by Trump last year is eagerly anticipated.
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