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.”