U.S. President Donald Trump issued new warnings on Friday about escalating trade tensions, proposing a 50% tariff on goods from the European Union starting June 1. He also signaled a potential 25% tariff on iPhones manufactured outside the United States.
These comments, made via social media, sent shockwaves through global markets that had recently seen some stabilization. Early trading saw the S&P 500 down 0.9%, the Nasdaq sliding 1.5%, and European markets falling by 1.1%.
Trump’s renewed pressure on the EU appears to stem from stalled negotiations. U.S. Treasury Secretary Scott Bessent expressed hope that the aggressive tariff proposal might prompt the EU to negotiate more earnestly, contrasting it with what he described as more cooperative talks with other nations.
Trump criticized the EU on social media, claiming it was established to exploit the U.S. in trade and describing negotiations with the bloc as unproductive. The European Commission chose not to comment directly but noted a scheduled conversation between the EU trade chief and his U.S. counterpart later that day.
Diplomats from all 27 EU nations were also expected to meet in Brussels to discuss the trade situation.
The president’s fluctuating trade policies have unsettled financial markets, weakened consumer and business confidence in the U.S., and raised concerns about inflation and potential global economic slowdown. Although many tariffs announced in early April were later paused, a baseline 10% import tax remained, and tariffs on Chinese goods were reduced from 145% to 30%.
Analysts note the surprising move to impose steeper tariffs on the EU than on China, calling into question the economic rationale behind such decisions. A 50% tax on European imports could increase U.S. consumer prices on items like German automobiles and Italian food products.
Last year, EU exports to the U.S. totaled about €500 billion, led by Germany, Ireland, and Italy. Major export categories included pharmaceuticals, cars and parts, chemicals, and aircraft.
Trade negotiations with multiple countries are ongoing, but progress has been inconsistent. At a recent G7 finance summit in Canada, leaders attempted to minimize the appearance of growing rifts over trade policy.
One analyst noted that Trump’s personal tensions with European leaders raise the likelihood of a prolonged trade dispute. Stocks of European carmakers and luxury brands—particularly vulnerable to U.S. tariffs—fell sharply, with companies like Porsche, BMW, and Mercedes seeing declines between 2% and 4.5%. Eyewear manufacturer EssilorLuxottica dropped over 5%.
The head of Volvo Cars warned that tariffs would likely result in price hikes for consumers and could make it economically unfeasible to sell some of the company’s smaller models in the U.S. Still, he expressed optimism that an agreement could be reached.
Focus on Apple
Trump also targeted Apple, reiterating that he expects the company to produce iPhones sold in the U.S. within the country rather than abroad. If not, he warned, Apple would face a minimum 25% tariff on those products.
He did not specify a timeline for the potential tariff, but Apple shares fell 2.3% following the comments. The U.S. market sees sales of over 60 million smartphones annually, but there is currently no domestic iPhone production.
Legal experts pointed out that imposing a tariff on a single company could be difficult to justify under existing trade law. Though there are mechanisms for applying company-specific tariffs, they typically require lengthy investigations.
Apple declined to comment on the matter. Previously, the company had benefited from exclusions to tariffs on electronic goods, many of which are manufactured in China.
To reduce its exposure to rising tariffs, Apple is accelerating plans to shift iPhone production for the U.S. market to India by 2026. Despite this, Trump and others, including Commerce Secretary Howard Lutnick, have continued to push for Apple to manufacture domestically. Earlier this year, Apple announced it would invest $500 billion over four years across several U.S. states, though it did not specify whether that would include iPhone production.
Analysts believe it would be difficult for Apple to fully relocate iPhone manufacturing to the U.S. within the next three to five years.
