US equity markets are testing the highs of the day, completely ignoring the headlines coming from Europe that the European Parliament decided to freeze a ratification vote in response to President Donald Trump’s escalating threats to seize Greenland.
Despite president trump walking back his most vociferous rhetoric during his lengthy speech at Davos, the Parliament’s trade committee postponed the vote indefinitely on Wednesday, casting doubt on whether the pact will ever get across the finish line.
“By threatening the territorial integrity and sovereignty of an EU member state and by using tariffs as a coercive instrument, the US is undermining the stability and predictability of EU-US trade relations,” said Bernd Lange, chair of Parliament’s trade committee, in a statement.
“We have been left with no alternative but to suspend work” on the trade deal, Lange added, “until the US decides to reengage on a path of cooperation rather than confrontation.”
Trump’s actions (and now Europe’s) have pushed the trade policy uncertainty index up dramatically (but well off Liberation Day highs)…
…and stocks could not care less (with Small Caps having now erased all the Greenland drama losses)…
Certainly seems that the market’s focus was on the possibility of kinetic action and not just a ‘disagreement’ over Greenland per se.
Wednesday’s decision was expected after senior lawmakers from Parliament’s largest political groups proposed a delay on Saturday, following Trump’s tariff announcement.
Manfred Weber, leader of Parliament’s largest group, the center-right European People’s Party, said on Wednesday that “for us as EPP, and I think for all parliamentarians, it’s clear there will be no ratification, no zero percentage tariffs access to the EU for US products until we have clarified the question of reliability.”
“Europe prefers dialogue and solutions — but we are fully prepared to act, if necessary, with unity, urgency and determination,” European Commission President Ursula von der Leyen, the EU’s top executive, told EU lawmakers on Wednesday morning.
Much to the European’s chagrin, we suspect Trump will not take any action to appease them to get the trade deal done unless and until the market ‘demands’ it.
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