- The EUR/GBP can be seen as the euro finds support in the middle of a renewed optimism about possible commercial negotiations between the US and China.
- The secretary of the US Treasury, Scott Besent, admitted that the tariffs between the US and China are unsustainable and should be reduced for significant negotiations.
- China prepares to lift sanctions to several MEPs, with the aim of reactivating the stagnant investment agreement between the EU and China.
The EUR/GBP advances after two consecutive loss sessions, quoting about 0.8560 during the first European hours on Thursday. The crossroads gains traction as the euro (EUR) finds support in a renewed optimism about possible commercial negotiations between the US and China. According to The Wall Street Journal, the White House is considering reducing tariffs on Chinese imports by up to 50% to create space for dialogue.
The secretary of the US Treasury, Scott Besent, acknowledged that the current levels of tariffs – 145% on Chinese goods and 125% on US assets – are unsustainable and should be reduced to allow serious conversations. However, Besent emphasized that US President Donald Trump will not act unilaterally. Meanwhile, the director of the National Economic Council, Kevin Hassett, warned that a comprehensive commercial agreement could take between two and three years to materialize.
President Trump reinforced that tariff reviews depend on China’s willingness to participate in the conversations. “If we do not reach an agreement, we are simply setting the price – then it depends on them to decide if they want to proceed,” he said, stressing that the 145% tariff rate remains in force due to limited trade with China.
In parallel, China prepares to lift sanctions to several members of the European Parliament (MEPS) as a gesture of good will, with the aim of reactivating the stagnant Integral Investment Agreement (CAI) between the EU and China. A spokesman for the president of the European Parliament, Roberta Metsola, confirmed that the discussions with Chinese counterparts are close to concluding and will update the leaders of the parliamentary groups once a formal decision is announced.
The sterling pound (GBP) could face winds against due to the growing expectations of a rate cut by the Bank of England (BOE). The markets are currently valuing in 82% the probability of a reduction of rates at the May meeting of the BOE, promoted in part by the broader impact of Trump’s changing commercial policy on the global economy, according to LSE data.
FAQS tariffs
Although tariffs and taxes generate government income to finance public goods and services, they have several distinctions. Tariffs are paid in advance in the entrance port, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and companies, while tariffs are paid by importers.
There are two schools of thought among economists regarding the use of tariffs. While some argue that tariffs are necessary to protect national industries and address commercial imbalances, others see them as a harmful tool that could potentially increase long -term prices and bring to a harmful commercial war by promoting reciprocal tariffs.
During the election campaign for the presidential elections of November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy. In 2024, Mexico, China and Canada represented 42% of the total US imports in this period, Mexico stood out as the main exporter with 466.6 billion dollars, according to the US Census Office, therefore, Trump wants to focus on these three nations by imposing tariffs. It also plans to use the income generated through tariffs to reduce personal income taxes.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
