Global financial markets turned cautious after reports that the European Parliament plans to suspend approval of a key trade deal with the United States. The announcement is expected on Wednesday in Strasbourg, according to sources familiar with the matter.
The decision comes at a tense moment in relations between the US and Europe. Former US President Donald Trump has renewed pressure on Europe over Greenland and warned of new tariffs. These threats have raised fears of a fresh trade dispute between two of the world’s biggest economies.
Markets responded quickly. European stocks fell for a second straight day on Tuesday. In the US, the Dow Jones dropped more than 1.7 percent. The S and P 500 fell over 2 percent, while the Nasdaq closed about 2.4 percent lower.
Asian markets were mixed on Wednesday. Major indexes in Japan traded slightly lower. Hong Kong and mainland China, however, saw modest gains.
Investors also moved toward safer assets. Gold prices climbed above 4,800 dollars an ounce for the first time. Silver slipped slightly after reaching a record high earlier in the week. Both metals have risen sharply over the past year as uncertainty in global markets has grown.
In currency trading, the US dollar remained stable after falling 0.5 percent overnight. That marked its largest daily drop since early December.
Trade tensions had eased in July after the US and Europe reached an agreement in Scotland. The deal reduced planned US tariffs on most European goods to 15 percent, down from an earlier threat of 30 percent. In return, Europe agreed to increase investment in the US and make changes expected to support American exports.
Despite the agreement, the deal still needs approval from the European Parliament. That approval now appears unlikely in the near term.
German lawmaker Manfred Weber said over the weekend that approval was not possible under current conditions. Bernd Lange, who leads the Parliament’s international trade committee, said suspending the deal was unavoidable.
He stated that threatening an EU member state’s sovereignty and using tariffs as pressure damages trust and stability in EU US trade relations.
The pause raises the possibility of retaliation from Europe. The EU previously listed 93 billion euros worth of US goods that could face tariffs.
French President Emmanuel Macron has urged the EU to prepare countermeasures. He has pointed to the anti coercion instrument, often called the trade bazooka, as one possible option. Speaking in Davos, he said using tariffs as leverage over territorial issues was unacceptable.
US officials have warned Europe against retaliation. Treasury Secretary Scott Bessent urged leaders to remain calm and avoid escalation.
