EU Halts US Trade Deal as Trump Threatens New Tariffs

Brussels and Washington are locked in a trade dispute after the European Union paused ratification of a trade agreement with the United States, responding to former President Donald Trump’s threats of new tariffs following a Supreme Court ruling against his previous levies. The situation has rattled global markets and raised concerns about a potential trade war.

Supreme Court Ruling and Trump’s Response

The dispute stems from a February 23, 2026, Supreme Court decision that struck down most of President Trump’s tariffs, which had been imposed using emergency powers. Following the ruling, Trump quickly moved to implement a 10% global tariff under a different statute, the Section 122 of the Trade Act of 1974, for a period of 150 days . He initially threatened a 15% tariff, but later announced a temporary 10% rate.

EU’s Reaction and Trade Deal Suspension

The European Parliament halted the ratification process of the trade deal, reached in July 2025 in Turnberry, Scotland, citing uncertainty over the US’s commitment to the agreement. Bernd Lange, chair of the European Parliament’s trade committee, stated the situation was “more uncertain than ever” and that the deal’s stability and predictability were at risk . Votes scheduled for Tuesday were postponed while lawmakers reassess the situation.

Global Market Impact

Trump’s threats and the ensuing uncertainty sent shockwaves through financial markets. On February 23, 2026, the Dow Jones Industrial Average fell by more than 820 points, or 1.66%, while the S&P 500 and Nasdaq Composite declined by 1.04% and 1.13%, respectively . European markets also experienced losses, with the pan-European Stoxx 600 index falling 0.4% and declines observed in the UK, France, Germany, Ireland, Belgium, and Sweden.

International Responses

Beyond the EU, other nations are also reacting to Trump’s actions. Japan has called on the US to ensure that any changes to the tariff regime do not negatively impact Japanese exports . Taiwan is seeking reassurances that a recently signed trade deal will not be undermined by the new tariffs and is delaying ratification of agreements related to technology exports . Brazil welcomed the Supreme Court decision, anticipating increased competitiveness for Brazilian companies in the US market .

The Turnberry Deal and Potential Repercussions

The trade deal between the US and EU, finalized in July 2025, aimed to eliminate trade barriers in various sectors for American exporters. However, the new tariffs threaten to erode the benefits of this agreement. The European Commission has stated that a deal is a deal, but will not accept any increase in US tariffs . The UK has also warned that “nothing is off the table” if the US imposes the 15% levy.

The situation remains fluid, with the potential for further escalation and significant implications for global trade relations.