The European Parliament is poised to suspend approval of the US tariffs deal, a move that could significantly escalate tensions between the US and Europe. This decision comes in response to Donald Trump's recent efforts to acquire Greenland, which has sparked threats of new tariffs. The suspension will be announced in Strasbourg, France, on Wednesday, marking a pivotal moment in the ongoing trade dispute. Financial markets have already been rattled, with European stock markets experiencing losses and the US Dow Jones, S&P 500, and Nasdaq all down by 1.3%, 1.5%, and 1.7%, respectively. The US dollar has also fallen sharply against the euro and pound. The situation is further complicated by rising borrowing costs worldwide, driven by a significant sell-off of long-term government debt. The US and the European Union, each other's largest trade partners, are now at a critical juncture. The deal, which was agreed upon in July at Trump's Turnberry golf course in Scotland, had set US levies on European goods at 15%, down from the 30% initially threatened. In exchange, Europe had agreed to invest in the US and make changes expected to boost US exports. However, the deal's approval from the European Parliament is now in jeopardy. Manfred Weber, a prominent German member of the European Parliament, stated that approval is not possible at this stage, following Trump's threat of tariffs over Greenland. The EU had previously suspended plans to retaliate against US tariffs, targeting $109 billion worth of American goods, while finalizing details. This reprieve ends on February 6, after which EU levies will come into force unless the bloc extends the deadline or approves the new deal. French Prime Minister Emmanuel Macron has urged the EU to consider its retaliatory options, including the 'trade bazooka' anti-coercion instrument. Meanwhile, US Treasury Secretary Scott Bessent has warned European leaders against retaliation, urging them to remain open-minded. The US has expressed impatience with European progress in approving the deal, citing ongoing disagreements over tech and metals tariffs. The US and the European Union, with their substantial trade in goods and services, are now at a critical juncture, with the potential for further escalation in trade tensions.
