According to local media, including the Danish news outlet DR, the global economy is experiencing a period of escalating tension as a result of the trade war initiated by US President Donald Trump. In this context, the European Union has begun to shift its strategy and is considering joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), as reported by Politico and cited by the Danish news site.
Von der Leyen: EU joining a trade agreement with Pacific Rim countries
European Commission President Ursula von der Leyen stated after an EU summit on Thursday evening that this accession would send a strong signal to the world that a broad, rules-based free trade agreement is possible. She emphasized, "This is a project I believe we should all be seriously involved in, because the CPTPP and the EU are major powers." She added that such an alliance could contribute to reforming or even replacing the World Trade Organization.
It is worth noting that the United Kingdom has already joined the agreement, which includes 12 countries such as Canada, Mexico, Japan, and Australia. Meanwhile, Trump has set a July 9 deadline for concluding a new trade agreement with the European Union.
Mette Frederiksen: If Washington imposes tariffs, we must respond in kind.
In the same vein, Danish Prime Minister Mette Frederiksen stated at the Brussels summit that the European Union must be prepared to respond if the United States lifts its suspension of tariffs on European goods at the beginning of July. She said, “My view is that if the Americans continue to impose tariffs, we must respond in kind.” She added, “It would be absurd to undermine our economies when, just yesterday at the NATO summit, we agreed that we face serious threats from several directions.”.
On the German side, Chancellor Friedrich Merz, speaking to German broadcaster ARD from Canada where he is attending the G7 summit, stated that he expects a trade agreement with the United States to be reached before the end of the summer. He indicated that the agreement between Germany and the United States would be similar to the one already concluded between Washington and London during the summit.
But not all negotiations are going smoothly. In a 30-minute meeting on the sidelines of the G7 summit, Japanese Prime Minister Shigeru Ishiba and President Trump failed to reach an agreement on reducing tariffs. According to Reuters, Ishiba stated that the two sides' positions remained "very far apart.".
Accelerated agreements between America and allied countries: Britain, South Korea, and China
In contrast, Washington made progress with the United Kingdom, with Trump announcing an agreement to reduce tariffs on British cars, aluminum, and steel, in exchange for London reducing tariffs on American beef and ethanol.
Amid the escalation, the Trump administration announced its willingness to extend the temporary suspension of tariffs, provided that negotiating countries – such as the European Union – demonstrate their intention to negotiate in ”good faith,” according to US Treasury Secretary Scott Bessent in a congressional hearing, as reported by Reuters.
On the monetary policy front, President Trump called on the US Federal Reserve to cut interest rates by a full percentage point after data showed a slight increase in the US inflation rate in May to 2.41% year-on-year. The Fed had previously kept the interest rate between 4.25% and 4.51%.
Sydbank's chief economist, Søren Kristensen, warned that the full impact of the new charges has not yet been reflected in the economic figures, as many stores are still relying on previous stock purchased before the new charges were imposed.
US inflation is putting pressure on markets, with direct repercussions for the European continent.
While financial markets are monitoring developments in these trade disputes, the World Bank Group announced a significant reduction in its forecast for global economic growth in 2025 by 0.4 percentage points, from 2.8% to 2.4%, attributing this decline to the trade wars led by Trump, which are expected to negatively affect US economic growth as well, as it will see a slowdown compared to 2024.
Meanwhile, South Korea's Blue House indicated that President Trump and his new South Korean counterpart, Lee Jae-myung, agreed during their first phone call to accelerate trade negotiations to reach a swift agreement on tariffs. South Korea is also subject to a tariff freeze period that extends until July 9.
With Mexico, tensions have eased, with Mexican President Claudia Sheinbaum announcing a significant decrease in fentanyl smuggling to the United States by 40%, one of the reasons Trump used to justify imposing tariffs of 25% on Mexican goods, even though many of those goods are not covered by these tariffs under the trilateral trade agreement.
It is worth noting that American car companies such as Stellantis, Ford, and General Motors saw their shares rise after obtaining licenses to import rare earth metals from China, which are important elements in the electric and traditional car industry, as Stellantis shares rose by 2.5%, Ford by 1.6%, and General Motors by 0.8%.
