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US President Donald Trump and European Commission President Jean-Claude Juncker have announced that the eurozone and the US will launch a new round of trade negotiations, notes the research team at Danske Bank.

Key Quotes

“In a joint statement, the two stated that the negotiations are aimed at (1) eliminating all tariffs, trade barriers and subsidies related to non-auto industrial goods, (2) reforming the WTO and (3) reducing trade barriers in general across the Atlantic.”

“Importantly, all new tariffs (incl. automobile tariffs) will be suspended during the negotiation period thereby dampening near-term trade war fears. The eurozone also pledged to raise its imports of US soybeans and US liquefied natural gas.”

“The announcement was somewhat surprising giving recent rhetoric from both Trump and Juncker. It is, however, still much too early to call this announcement more than a semi-truce even if US equities jumped and USD FX/FI sold off on the announcement.”