Trump’s tariff delay: Markets cheer, but the storm’s not over

2 minutes read

27 May 2025

Trump’s tariff delay: Markets cheer, but the storm’s not over

It began with a tweet, as these things often do. Over the weekend, President Trump announced that his administration would delay a planned 50% tariff on European Union goods, shifting the deadline from 1 June to 9 July. The move followed a tense call with European Commission President Ursula von der Leyen and sent a ripple of relief through global markets. Equity futures in the US and Europe surged, Asian shares climbed, and for a moment, investors exhaled.

But as the sun rose on Tuesday, traders and analysts alike were left wondering: is this a genuine olive branch, or just a pause before the next volley?

A fragile calm: Markets react to the tariff delay

The immediate market reaction was classic: risk-on. Contracts for the S&P 500, Nasdaq 100, and Euro Stoxx 50 all rose about 1% in pre-market trading. Asian indices mirrored the optimism. Oil prices ticked higher, gold slipped, and the dollar wobbled near five-month lows.

Tim Waterer, chief market analyst at KCM Trade in Sydney, summed up the mood: “A clear pattern has emerged when it comes to Trump’s tariff strategy—hefty tariff threats soon followed by tariff pauses during which negotiations ensue. So investors are getting to know the Trump tariff playbook quite well, with his back-and-forth with the EU in this matter being the latest such example.”

European stocks, battered by Friday’s tariff threat, bounced back on Monday. Ursula von der Leyen was quick to signal readiness. “The EU and US share one of the most significant and intimate trade relationships globally. To achieve a favourable agreement, we will need time until July 9,” she posted.

Yet, beneath the surface, nerves remain frayed. The White House may have pressed pause, but nothing fundamental has changed. The risk of a trade war between the world’s two largest economic blocs is still alive and kicking. Bar chart showing VIX volatility dropping from 21.30 before to 17.20 after the US tariff delay, with Winvesta logo.

High-stakes dance: Why investors shouldn’t relax yet

For all the market cheer, experts warn that this is just the eye of the storm. Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, described the situation as a “high-stakes tango, with July 9 as the next flashpoint.” He added, “Markets will hang on every tweet and trade talk whisper, with investors betting on whether this delay is a genuine olive branch or just Trump reloading for a bigger tariff showdown. Buckle up; this ride’s far from over.”

The EU has proposed phased tariff reductions and wants talks based on “mutual respect.” But Trump’s America-first approach could turn negotiations into a fierce battle, disrupting supply chains and igniting inflation. Sectors like technology and industrials are bracing for volatility, with every headline and presidential post capable of swinging sentiment.

Holger Schmieding, Chief Economist at Berenberg, cautioned that six weeks is barely enough to sketch out a broad agreement, let alone resolve deep-rooted issues. “Europe sort of tries to take a middle path,” he observed, noting the EU’s capacity to retaliate but its reluctance to escalate.

So, as Wall Street opens after the Memorial Day break, the mood is upbeat but wary. The tariff delay has bought negotiators time and given investors a breather, but the underlying tensions remain. For now, the market rally is real—but the next act in this trade drama is already looming on the horizon.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Winvesta. We advise investors to check with certified experts before making any investment decisions.