U.S. President Donald Trump reignited global trade tensions on Friday by threatening to impose a 50% tariff on goods imported from the European Union (EU) starting June 1, 2025. He also warned Apple that a 25% tariff could be imposed on any iPhones manufactured outside the United States.
Market Reaction to Trump’s Trade Threats
The announcement, made via Trump’s social media platform Truth Social, caused immediate market turmoil. The S&P 500 dropped 0.9%, the Nasdaq fell 1.5%, and European shares declined by 1.1% in early trading following the news. Shares of Apple also declined by 2.3%.
Trump’s Frustration Over EU Trade Talks
Trump expressed frustration over stalled trade negotiations with the EU, accusing the bloc of exploiting the United States. He wrote, “The European Union, which was formed for the primary purpose of taking advantage of the United States on TRADE, has been very difficult to deal with.” Adding, “Our discussions with them are going nowhere!”
EU officials declined to comment immediately but planned to continue talks. EU trade chief Maros Sefcovic was scheduled for a call with his U.S. counterpart, Jamieson Greer, and EU envoys were set to meet in Brussels later the same day.
Impact on EU Industries and Exports
The potential 50% tariff threatens to raise consumer prices on a wide range of EU products, including German cars, Italian olive oil, pharmaceuticals, chemicals, and aircraft. Last year, the EU exported approximately 500 billion euros worth of goods to the U.S., with Germany, Ireland, and Italy as top exporters.
German luxury and car manufacturers were particularly affected by the announcement, with shares of Porsche, Mercedes, and BMW falling between 2% and 4.5%.
Volvo Cars CEO Hakan Samuelsson commented on the possible effects, saying “customers would have to pay a large part of tariff-related cost increases, and that it could become impossible to import the smallest cars in the company’s lineup to the United States.” Despite concerns, Samuelsson expressed optimism: “I believe there will be a deal soon. It could not be in the interest of Europe or the U.S. to shut down trade between them.”
Targeting Apple’s Manufacturing Strategy
Trump specifically targeted Apple in his trade rhetoric, stating on Truth Social, “I have long ago informed Tim Cook of Apple that I expect their iPhones that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else.”
He warned, “If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S.”
Apple did not respond to the tariff threat but recently announced plans to shift much of its iPhone production to India by the end of 2026. However, analysts doubt Apple can fully comply with Trump’s manufacturing demands in the near term. Analyst Gil Luria from D.A. Davidson & Co noted, “It is hard to imagine that Apple can be fully compliant with this request from the president in the next 3-5 years.”
Legal experts also caution that company-specific tariffs face significant legal challenges, as Sally Stewart Liang, partner at Akin Gump, explained: “There’s no clear legal authority that permits company specific tariffs, but the Trump administration may try to shoehorn it under its emergency power authorities.”
Broader Context of Trump’s Trade Policies
This latest escalation follows a pattern of stop-and-start trade wars initiated by Trump, which have unsettled markets and dampened consumer and business confidence globally. After imposing steep tariffs in early April, the White House paused many of them, maintaining a 10% baseline tariff on most imports and reducing the Chinese tariff from 145% to 30%.
Treasury Secretary Scott Bessent told Fox News, “I would hope this would light a fire under the EU,” indicating hopes that the new tariff threat would spur EU concessions.
Conclusion
Trump’s renewed threats underline ongoing trade tensions between the U.S. and the EU, with potentially wide-ranging effects on markets and industries on both sides of the Atlantic. Whether these threats will translate into actual tariffs remains uncertain, but the rhetoric alone has already rattled investors and companies.