In a significant development that has buoyed global markets, President Donald Trump announced a delay in the implementation of a proposed 50% tariff on European Union (EU) imports. The decision, revealed on Sunday via Truth Social, pushes the tariff’s start date from June 1 to July 9, providing a window for intensified trade negotiations between the U.S. and the EU.

The announcement sparked a robust rally on Wall Street. On Tuesday, the Dow Jones Industrial Average soared 741 points (1.8%), the S&P 500 climbed 2.1%, and the Nasdaq Composite advanced 2.5%. These gains erased losses from the previous week, which had been driven by fears of escalating trade tensions.

European markets also responded positively, with Germany’s DAX index reaching a record high. The euro and U.S. dollar both strengthened against safe-haven currencies, reflecting renewed investor confidence.

The proposed tariffs, announced earlier this month, targeted over $600 billion worth of EU goods, including automobiles, pharmaceuticals, machinery, and luxury food items like wine and cheese. The move was part of President Trump’s “reciprocal tariff” policy, aimed at addressing what he perceives as unfair trade practices by the EU.

The EU had responded with a proposal for a “zero-for-zero” tariff agreement on industrial goods, seeking to de-escalate the situation. However, negotiations had stalled until the recent breakthrough.

The delay in tariff implementation followed a phone call between President Trump and European Commission President Ursula von der Leyen. Both leaders expressed a commitment to fast-tracking trade talks, aiming to reach a comprehensive agreement by the new July 9 deadline.

EU trade chief Maroš Šefčovič confirmed the bloc’s readiness to accelerate negotiations, stating that Europe is “fully committed” to reaching a deal.

While the market rally reflects optimism, analysts caution that volatility may persist. The unpredictability of trade policy decisions has led some investors to adopt strategies like “TACO”—”Trump Always Chickens Out”—betting on the likelihood of tariff threats being retracted.

Upcoming economic indicators, including corporate earnings reports and Federal Reserve minutes, will also play a crucial role in shaping market sentiment. Minneapolis Fed President Neel Kashkari has advocated for maintaining current interest rates amid global trade uncertainties.

The postponement of the EU tariffs has provided temporary relief to global markets and opened the door for renewed trade negotiations. However, the situation remains fluid, and investors are advised to stay vigilant as the July 9 deadline approaches.