The European Union will pause its retaliatory tariffs on U.S. imports for 90 days, the bloc announced Thursday, a day after President Donald Trump abruptly backed down on his punishing global levies. But the accelerating trade war between China and the United States showed no signs of abating, as Trump left in place his steep tariffs aimed at Beijing.

Trump’s move after a week of market upheaval sent indexes in Europe and Asia higher Thursday — after the S&P 500 rallied the day before to its biggest daily gain since 2008. His reversal prompted the EU to put its new tariffs on hold “to give negotiations a chance,” said Ursula von der Leyen, president of the European Commission, though she warned that the tariffs would take effect if talks “are not satisfactory.”

Trump left in place a base tariff of 10% on virtually all imports, as well as levies on autos, steel and aluminum. And his turnabout did not temper the greater concerns of economists who cautioned that the full repercussions from the trade tensions between Washington and Beijing would not be felt for weeks.

Investors are also monitoring a key economic report set for release Thursday morning: The consumer price index is expected to show inflation cooling in March, with prices forecast to have risen 2.5% from the previous year. That data encompassed a period before the majority of Trump’s tariffs — including the most recent ones on China — went into effect. And despite the reprieve for some nations, economists have been warning that the tariffs now in place will still prove costly, not only leading to slower growth but also higher inflation.

Trump ratcheted up taxes on Chinese goods to 125%, his third such increase in a week, after Beijing raised tariffs on U.S. imports to 84%, escalating the conflict between the world’s two largest economies.

Trump suggested Wednesday that he was waiting to hear from China’s leader, Xi Jinping, so the two could broker a deal. China has said it is willing to hold talks, but not under duress.

“China wants to make a deal,” Trump said. “They just don’t know quite how to go about it.”

Here’s What Else to Know:

• Relief rally: Stocks in Asia and Europe followed the lead of U.S. markets and rallied Thursday. The biggest winners were Taiwan and Japan, each up over 9%.
• Inflation update: Federal Reserve watchers will keep a close eye on the consumer price index report, set for release at 8:30 a.m. Eastern. U.S. inflation has been sticky, and the Fed has signaled it will not be rushing to cut interest rates.

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This article originally appeared in The New York Times.

By The New York Times/Eric Lee
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