Trump Eyes Affordability, Tariffs in State of the Union Address

Henrietta Treyz, Co-Founder at Veda Partners, discusses her expectations for President Trump's State of the Union Address Tuesday, as well as the immediate reaction from Trump to the Supreme Court's tariff decision.

The European Union froze ratification of its US trade deal until President Donald Trump solidifies his upended tariff plans, injecting economic turbulence into an already strained relationship.

EU lawmakers on Monday suspended legislative work on approving the deal. The move came days after the US Supreme Court struck down Trump’s use of an emergency-powers law to impose his so-called reciprocal tariffs around the world.

Both European stocks and the S&P 500 were down 0.3% as cautious investors assessed the latest developments.

“We want to have clarity about the situation,” European Parliament trade committee chair Bernd Lange said at a meeting on Monday. “We want to have clarity from the US that they are respecting the deal because that’s a crucial element.”

The fresh delay extends an already long road for the trade deal, which was reached last summer but has never been fully implemented. If the pact falls apart, it threatens to reopen a wound in a transatlantic relationship already suffering as Trump vacillates on Russia’s war in Ukraine, pushes to control Greenland and insults EU leaders.

“Any Country that wants to ‘play games’ with the ridiculous supreme court decision, especially those that have ‘Ripped Off’ the U.S.A. for years, and even decades, will be met with a much higher Tariff, and worse, than that which they just recently agreed to,” Trump wrote Monday morning on Truth Social. “BUYER BEWARE!!!” The Supreme Court’s nixing of US President Donald Trump’s “reciprocal” tariffs is throwing fresh confusion over the raft of trade deals negotiated by global partners as the inescapable reality of ongoing levies remains a threat.

The European Union on Monday froze the ratification process of its agreement with Washington. The move injected economic turbulence into an already strained transatlantic relationship.

Without mentioning the EU specifically, Trump warned nations against taking advantage of his legal setback.

“Any Country that wants to ‘play games’ with the ridiculous supreme court decision, especially those that have ‘Ripped Off’ the U.S.A. for years, and even decades, will be met with a much higher Tariff, and worse, than that which they just recently agreed to.,” he wrote in a post on Truth Social.

Read More: Trump Vows Higher Tariffs for Nations That ‘Play Games’ on Deals

Meanwhile, Indian trade officials postponed a trip to the US that would have aimed at concluding their interim accord.

The Trump administration swiftly announced plans to replace the prior tariffs with a new, across-the-board 15% levy on US imports. While that creates temporary winners such as China and losers including the UK, it leaves the overall weighted tariff rate only marginally lower for the American businesses and consumers actually footing the bill.

US stocks traded lower and the dollar erased a 0.3% drop as the renewed uncertainty weighed on sentiment. But moves were modest when compared with the dramatic swings seen last April when Trump’s unilateral tariffs were first announced, setting off months of deal making.

Now, whether a new status quo settles quickly will largely depend on what America’s trading partners do after administration officials called on them to honor prior trade pledges.

Any walk-back from prior agreements, especially given recent European pushback over Trump’s bid to gain control over Greenland, risks sparking a fresh round of brinkmanship and disruption for a world economy that has so far been muddling through Trump Trade War 2.0.

“Uncertainty is back, and given the latest muscle-flexing by European leaders, the risk of escalation is now higher than it was a year ago,” Carsten Brzeski and James Knightley at ING Groep NV wrote in a note. “Announcements since the Supreme Court’s ruling strongly confirm that Trump has no intention of removing his ‘most beautiful word’ from the English dictionary.”

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