The European Parliament has paused the approval of a US-EU trade deal that the two agreed to in July. This came in protest against US President Donald Trump's demand to take over Greenland and his threats of tariffs against European allies.
The announcement came from France as Trump addressed the World Economic Forum in Davos, amid renewed trade tensions that rattled markets and revived fears of a transatlantic trade war.
Trump later said he had reached a “framework” understanding on Greenland's future and would not impose tariffs of up to 25 per cent on eight NATO countries. Nonetheless, lawmakers have frozen work on the trade agreement, including measures to reduce EU import duties on US goods and extend zero tariffs on American lobster exports.
How This Could Impact The US
The suspension of the US-EU trade deal risks reopening economic uncertainty for American exporters and investors. Without parliamentary approval, planned reductions in EU import duties on US goods, including agriculture and manufactured products, will not take effect, limiting market access for US companies at a time when Europe remains America's largest trading partner.
This revives the threat of EU retaliation. Brussels has warned it could reimpose tariffs on up to 93 billion euros' worth of US goods, measures that were frozen while the deal was being finalised. If enacted, these tariffs would raise costs for US exporters, disrupt supply chains, and potentially feed into higher prices for consumers.
The pause also dents business confidence. The July deal was seen as stabilising after months of tariff threats, and its suspension makes US-EU trade seem unpredictable, which could slow investments and trade.
French President Emmanuel Macron has indicated the EU may deploy its “anti-coercion” trade instrument if Trump persists.
What Is The US-EU Trade Deal
In July 2025, Trump and European Commission President Ursula von der Leyen reached a framework trade deal aimed at stabilising transatlantic trade and preventing a full-scale tariff war between the US and the European Union.
While the agreement provided a roadmap for reducing trade barriers on both sides, it still required approval from the European Parliament to become fully effective.
What The US-EU Deal Proposed
- Tariff Caps: The US agreed to limit tariffs on most European exports to around 15 per cent, reducing the threat of higher levies that had been looming over EU goods, including cars, semiconductors, and pharmaceuticals.
- Tariff Relief On Specific Goods: Certain sectors, such as aircraft and aircraft parts, chemicals, and semiconductors, were expected to benefit from zero or near-zero tariffs under the agreement.
- EU Concessions: The EU committed to lowering or eliminating duties on various US industrial, agricultural, and seafood products. This included extending zero tariffs on US lobster exports and increasing access for other key US goods.
- Energy and Investment Commitments: European companies pledged large-scale purchases of US energy supplies, including liquefied natural gas, oil, and nuclear products, along with significant investments in the US economy.
