Stocks jump after Trump’s EU tariff pause

In a move that’s become something of a strategic mantra, President Donald Trump announced a pause on his promise to enact a new 50% trade tariff on import goods from the European Union following a conversation with European Commission President Ursula von der Leyen over the weekend.

In a posting to Truth Social Monday morning, Trump defended last week’s tariff declaration but said the progression of trade talks with EU officials was a positive sign that a new agreement could be reached.

“I was extremely satisfied with the 50% Tariff allotment on the European Union, especially since they were ‘slow walking (to put it mildly!), our negotiations with them,’” Trump wrote. “Remember, I am empowered to ‘SET A DEAL’ for Trade into the United States if we are unable to make a deal, or are treated unfairly. I have just been informed that the E.U. has called to quickly establish meeting dates. This is a positive event, and I hope that they will, FINALLY, like my same demand to China, open up the European Nations for Trade with the United States of America. They will BOTH be very happy, and successful, if they do!!!”

Investors were spooked by Trump’s announcement last Friday that he was considering new tariffs on EU goods as well as foreign-made Apple iPhones and the major U.S. stock indexes all showed declines to end the week.

But markets were buoyed by a Trump social media post on Sunday indicating that he was pushing out a potential start date for new EU tariffs from June 1 to July 9. Around midday Tuesday, the Dow Jones Industrial Average was up over 1.3%, the S&P 500 had gained 1.6% and the Nasdaq Composite had gained over 2%.

In a Saturday post on X, von der Leyen shared an upbeat report on her talk with Trump and noted the 27-nation EU was poised to move forward with U.S. trade talks.

“Good call with @POTUS,“ von der Leyen wrote. ”The EU and US share the world’s most consequential and close trade relationship. Europe is ready to advance talks swiftly and decisively. To reach a good deal, we would need the time until July 9."

Consumer confidence shows unexpected uptick

New data showing an unexpectedly sharp rise in consumer confidence in May was also helping boost investor markets following the Memorial Day holiday.

The Conference Board reported on Tuesday its Consumer Confidence Index increased by 12.3 points in May to 98.0, up from 85.7 in April. The jump exceeded the Dow Jones Consensus expectation of an 86 reading, per a report from CNBC.

Stephanie Guichard, senior economist for the Conference Board, said declining international trade tensions had a positive impact on U.S. consumer outlooks across multiple categories.

“Consumer confidence improved in May after five consecutive months of decline,” Guichard said in the report. “The rebound was already visible before the May 12 U.S.-China trade deal but gained momentum afterwards. The monthly improvement was largely driven by consumer expectations as all three components of the Expectations Index — business conditions, employment prospects and future income — rose from their April lows."

While consumer confidence was mostly on the rise in May, Americans’ collective feelings about job prospects remained a weak spot.

“Consumers were less pessimistic about business conditions and job availability over the next six months and regained optimism about future income prospects,” Guichard said. “Consumers’ assessments of the present situation also improved. However, while consumers were more positive about current business conditions than last month, their appraisal of current job availability weakened for the fifth consecutive month.”

The new report also notes consumers had a positive response to trends in U.S. investment markets which have, in spite of last Friday’s down cycle, been mostly in recovery mode since the most severe of Trump’s earlier trade decrees were put on pause.

“With the stock market continuing to recover in May, consumers’ outlook on stock prices improved, with 44% expecting stock prices to increase over the next 12 months (up from 37.6% in April) and 37.7% expecting stock prices to decline (down from 47.2% in April)," Guichard said. “This was one of the survey questions with the strongest improvement after the May 12 trade deal.”

The trade policy rollercoaster

On May 12, Trump announced a 90-day pause on his previous 145% tariff assessment on many imported goods from China. That move followed an April 9 pause on a wide swath of reciprocal international tariffs revealed a week earlier in Trump’s self-proclaimed “Liberation Day” decree.

The on-again, off-again tariff policy gyrations have cast a cloud of uncertainty over the U.S. business sector and roiled investment markets. And a growing number of U.S. businesses, including retail giant Walmart, have recently signaled coming price increases due to tariff assessments, in spite of the various pauses on previously announced levies.

Here’s where new U.S. tariffs stand for the moment:

• China tariffs now at 30%, including a 10% base rate and 20% fentanyl-targeted levy.
• Tariffs of 25% are in place on steel and aluminum imports, imported automobiles and goods from Canada and Mexico not covered by the United States-Mexico-Canada Agreement.
• Imports from all other countries are subject to a 10% trade levy.