The European Parliament is set to suspend approval of the US tariffs deal agreed in July, according to sources close to its international trade committee.
Okay News reports that the suspension will be announced in Strasbourg, France, on Wednesday.
The move escalates tensions between the US and Europe following Donald Trump’s push to acquire Greenland and his weekend threat of new tariffs on countries opposing the plan.
The standoff has rattled financial markets, reviving concerns of a trade war and possible retaliation.
European stock markets declined for a second day, while in the US the Dow Jones fell 1.3% in midday trading, the S&P 500 dropped 1.5%, and the Nasdaq declined 1.7%.
The euro rose 0.7% against the dollar to $1.1731, and the pound increased 0.2% to $1.346.
Borrowing costs rose globally as long-term government debt sold off heavily, pushing up yields on 30-year bonds in the US, UK, and Germany.
The July deal reduced US levies on European goods from 30% to 15% as part of Trump’s “Liberation Day” tariffs in April.
In exchange, Europe agreed to invest in the US and make changes to boost US exports.
The deal requires European Parliament approval to take effect.
On Saturday, German MEP Manfred Weber stated approval was “not possible at this stage” after Trump’s Greenland-related tariff threat.
The EU had paused retaliation plans targeting €93bn ($109bn, £81bn) worth of US goods while finalising the deal.
That reprieve ends on February 6, meaning EU levies would take effect on February 7 unless extended or the deal is approved.
French Prime Minister Emmanuel Macron urged the EU to consider retaliatory measures, including the anti-coercion instrument, describing the US tariffs as “fundamentally unacceptable” when used as leverage against territorial sovereignty.
US Treasury Secretary Scott Bessent warned against retaliation, urging European leaders to “have an open mind” and wait for Trump’s Davos address.
Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer said the US would respond to any retaliation.
The US and EU are each other’s largest trade partners, with more than €1.6tn ($1.9tn, £1.4tn) in goods and services exchanged in 2024—nearly a third of global trade.
