President Trump threatened to impose 50% tariffs on the European Union, potentially effective as of June 1. He announced his Truth Social platform before the U.S. stock market opened on Friday. Trump claimed that trade talks with the European Union “were going nowhere” and that “straight 50%” tariffs could go into effect.
The European Union is one of the United States’ largest trading partners. Stocks in Europe fell immediately after the announcement, with France’s CAC 40 index losing 1.7%. The impact was also significant in the U.S., with approximately 60% of stocks within the S&P 500 experiencing a decline.
Trump specifically targeted Apple, urging CEO Tim Cook to move the production of iPhones sold in the United States to domestic factories. He warned that a tariff “of at least 25% must be paid by Apple to the U.S.” if it does not comply. Other companies have also reported challenges due to economic uncertainty.
Deckers Outdoor, the company behind the Hoka and UGG brands, stated that it would not provide financial forecasts for the full upcoming year due to economic unpredictability. Ross Stores also pulled its financial estimates for the whole year, citing that more than half of its goods come from China.
Tariff threats impact global trade
CEO Jim Conroy said, “We expect pressure on our profitability if tariffs remain at elevated levels.”
Trade and logistics experts warn that Trump’s threats to impose 50% tariffs on European Union goods could counter his objective of revitalizing American manufacturing. European imports to the U.S. play a crucial role in domestic manufacturing, and such tariffs may inadvertently increase production costs in the United States. “A big tariff on European imports will backfire, making American products more expensive to produce,” said Andy Abbott, CEO of ocean carrier Atlantic Container Line.
The uncertainty in trade negotiations is also a significant point of concern. Josh Teitelbaum, senior counsel of Akin, noted that “Trump’s frustration reflects this underlying dynamic.”
The European Union has been following tried-and-true rules of global commerce as it negotiates with the Trump administration to avert painful tariffs on cars, pharmaceuticals, and other goods. However, President Trump is ripping up that rule book.
European officials have approached negotiations as though they are reasoning with an ally. However, they have met with a Trump administration that views this less as a chance for two geopolitical allies to seek a mutually beneficial solution and rather as an opportunity to pressure a commercial rival into making concessions. The ongoing tension highlights the contrasting approaches to trade negotiations.
While the E.U. continues to adhere to traditional rules, the Trump administration’s aggressive tactics are causing significant friction between the two powers, and resolving them seems increasingly difficult. Nearly $5 billion in goods and services cross the Atlantic between the United States and the European Union every single day, by E.U. estimates, underscoring the high stakes involved in these negotiations.
