Wall Street Jumps as Trump Delays EU Tarriffs
May 26th, 2025
Sharikkaa Shanker
May 26th, 2025
Sharikkaa Shanker
U.S. markets got a much-needed boost this week after President Donald Trump announced a delay in the imposition of punitive tariffs on European Union imports, calming fears of an imminent trade war. Originally set to take effect June 1, the 50% tariff hike will now be held off until July 9 following a last-minute phone call between Trump and European Commission President Ursula von der Leyen.
The decision, framed by the White House as a strategic move to allow for further negotiation, sparked a surge in investor confidence. Analysts say the delay offers temporary relief for American manufacturers, tech firms, and consumers already struggling with inflationary pressures and global supply chain strain.
Though Wall Street was closed for Memorial Day, U.S. stock futures soared after the announcement. Futures on the Dow Jones Industrial Average climbed 1.1%, while the S&P 500 and Nasdaq-100 futures rose by 1.3% and 1.5%, respectively. “Investors were bracing for a worst-case scenario,” said Lauren Simmons, equity strategist at Morgan Stanley. “This gives companies time to adjust—and maybe avoid a direct hit to their bottom line.” Industries particularly exposed to U.S.-EU trade—such as aerospace, automobiles, and agriculture—breathed a sigh of relief. Boeing, Caterpillar, and Ford all saw positive movement in after-hours trading.
Not all reactions were rosy. Apple shares fell 3% after Trump publicly encouraged the company to “bring iPhone production back to American soil,” hinting at a potential 25% tariff on foreign-assembled electronics. Though no formal action was taken, the remarks stirred anxiety among tech investors and raised questions about the future of U.S. manufacturing policy.
“Tech firms are in a bind,” said Amy Liu, trade policy analyst at the Brookings Institution. “They depend on global supply chains. Suddenly reshoring production isn’t just costly—it’s infeasible in the short term.”
Trump’s announcement comes as part of a broader election-year strategy to demonstrate strength on trade while avoiding immediate economic disruption. Polling from Pew Research shows that trade remains a top concern for independent voters, especially in Rust Belt states. “The president is walking a tightrope,” said Kevin Hassett, former chairman of the Council of Economic Advisers. “He’s signaling toughness to his base but also trying to keep the markets stable long enough to avoid a summer recession.” At a campaign stop in Pennsylvania, Trump doubled down on his message: “We’re done getting ripped off by Europe. But we’re giving them one last chance to play fair.”
With inflation still hovering above the Federal Reserve’s 2% target, economists are now debating how prolonged trade uncertainty might influence monetary policy. Minneapolis Fed President Neel Kashkari said this week that global trade developments, particularly tariff-related supply shocks, are “very much on the Fed’s radar.” Markets have begun pricing in the possibility of a rate cut in September, particularly if tariffs eventually take effect and consumer prices jump again.
While the delay offers momentary stability, the underlying issues—digital services taxes, auto exports, and agricultural quotas—remain unresolved. American farmers, already impacted by previous tariff cycles, fear they could once again be caught in the political crossfire. “Our soybean and corn exports to Europe are already fragile,” said Rachel Talley, a spokesperson for the National Farmers Union. “We need long-term certainty, not headline-driven chaos.” For U.S. exporters, the threat of a 50% tariff still looms large. Companies with deep EU ties have started contingency planning, moving some operations or warehousing overseas to hedge against July disruptions.
With the new deadline set for July 9, high-level talks between Washington and Brussels are expected to resume. But experts warn that the outcome is far from assured. “Markets are breathing a sigh of relief, but don’t be fooled,” said Mohamed El-Erian, chief economic advisor at Allianz. “If negotiations collapse or stall, we’ll see more volatility—and more pain for U.S. consumers and exporters alike.” For now, Wall Street is rallying. But Main Street businesses are hoping this delay leads to diplomacy, not just delay.
Extemp Analysis by Daphne Kalir-Starr
Extemp Question: Can American businesses trust the Trump administration to offer predictable trade policy?
AGD: As usual with Trump questions, an easy AGD is always a joke about his administration. Easy ideas could be: find odd items he has tariffed (penguins, Wakanda, etc . . .), some ridiculous thing Trump has said (“I’m the Martha Stewart of business but with pizzazz” and then say something like “and yet, it seems like the Trump administration is not indeed cooking). However as your resident advocating extemper, another good route could be a story. Find someone who can’t afford food or life saving medicine because of Trump’s tariffs. Economic speeches can easily feel out of touch to an audience – after all – most lay judges won’t be thrilled by the idea of listening to a seven minute speech on tariffs and interest rates. Make them see themselves in the topic.
Background: Short and concise with three sentences. Economic topics require excellent word economy, and snappy understandable definitions (I’d actually recommend coming up and memorizing how you would define a tariff, interest rate and the federal reserve). My first sentence would be explaining Trump’s policy so far, specifically global tariffs because this question is asking about trade. My second sentence would be about the volatility, and the impact on businesses who are struggling to get foreign goods. My third sentence would be about Trump’s recent announcement about a reprieve.
SOS: find a statistic about how much the average American family has lost because of tariffs. Make it hit home. For example: “And its when considering, the Center For American Progress explains on April 4th, the average American family/small business will lose 3,800 dollars yearly due to Trump’s tariffs, it is for their sake we must ask”
Q: Can American businesses trust the Trump administration to offer predictable trade policy?
A: (my take) No – because
Trade policy is utilized as negotiating tactic
The stockmarket is gamed for profit
Economic allies are selected by personal preference
Substructure per reason should be A. Present or Past (one aspect of what goes/went into Trump’s trade decisions) B. future (how this will create unpredictable policy for businesses)
a. (AP News May 2nd) Trump uses tariffs to negotiate as diplomatic leverage rather than for economic rationale. (Examples could be: tariffing china bc of the fentanyl trade, tariffing Mexico because of immigration)
b. (WSJ 14 hrs) These political decisions change rapidly depending on who gives into demands, creating volatility for businesses who can’t keep up with changing cost of foreign goods
a. (NYT Apr 8th) Trump games the stock market through his trade policy announcements (Truth social post “get ready to buy” after market crashed to make it go up, suspending global tariffs because of 18% loss)
b. (Yale Insights Apr 7th) this causes markets to go up and down, impacting businesses who have invested.
a. (Al Jazeera May 15th) Trump picks enemies and allies based on person pref. (Accepting plane from Qatar then announcing “huge” investment plan between US, Saudi Arabia, and Qatar, choosing not to do recip tariffs on Russia bc there are “already sanctions” when in reality bc he likes putin)
B. (Atlantic Council Apr 25th) This means trade policy is made or broken by who Trump likes that day (example: Truth Social post “VLADIMIR STOP” shows how his whims change, or inviting Mark Carney to the White House after calling Canada the 51st state)
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