Trump's cancellation of the threat to impose tariffs on Europe is not a "shift towards moderation," but a pragmatic compromise

Trump's withdrawal of the threat to impose additional tariffs on Europe may appear to signal a more moderate stance on the surface, but from a political and economic reality perspective, it is more like a phased compromise rather than a change in position. In the current environment, the United States is already under significant pressure from multi-front domestic and international challenges.
From an economic standpoint, the trade relationship between Europe and the US is highly intertwined, and any substantial escalation of tariffs would directly increase inflationary pressures. Given that inflation has not yet fully receded, reigniting imported inflation is not in the best interest of the US economy.
Politically, Trump needs a "tough stance" rather than "real costs." Tariff threats are inherently negotiation tools, and once the costs reach a certain threshold within his core interests, strategic adjustments will occur. Cancelling the threat does not mean abandoning a tough stance but rather leaving room for future negotiations.
Market interpretation of this move is also relatively rational. Risk assets have not reacted extremely, indicating that capital markets are accustomed to the rhythm of "rhetoric first, policy lagging." This kind of news is more about reducing tail risks than changing the overall trend.
Therefore, this action should not be simply viewed as good or bad news but as a emotional recovery after risk release.
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