An escalatory spiral that leads towards Eurasia's 10% 'trade war' scenario, however, would prompt Brussels to deploy escalatory measures, such as "export controls/duties, public procurement curbs, and/or penalties on U.S. services exports" by using the ACI "trade bazooka as a last resort," they concluded.

European shares climbed on Wednesday, buoyed by hopes of a trade agreement between the European Union and United States after Japan struck a deal that lowers tariffs on its autos, sending Japanese stocks to a one-year high.

WASHINGTON (Reuters) -U.S. President Donald Trump's Middle East envoy Steve Witkoff will travel to Europe this week for meetings on Israel's war in Gaza and a range of other issues, a U.S. official said on Tuesday, adding Witkoff will continue pushing for a ceasefire in the Palestinian enclave.