Estimated read time: 5-6 minutes
- Trump threatens 50% tariffs on EU goods and 25% on iPhones.
- Markets react negatively; EU, Apple, and analysts express concern over trade impacts.
- Trump's tactics aim to pressure EU negotiations and Apple production shifts to the U.S.
WASHINGTON — President Donald Trump threatened on Friday to ratchet up his trade war once again, pushing for a 50% tariff on European Union goods starting June 1 and warning Apple he may slap a 25% levy on all iPhones bought by U.S. consumers.
The twin threats, delivered via social media, roiled global markets after weeks of de-escalation had provided some reprieve. Major U.S. indexes were down and European shares fell, the dollar weakened while the price of gold, a safe-haven for investors, rose. U.S. Treasury yields fell on fears about tariffs' effect on growth.
Trump's broadside against the EU was prompted by the White House's belief that negotiations with the bloc are not progressing fast enough. But his saber-rattling also marked a return to Washington's stop-and-start trade war that has shaken markets, businesses and consumers and raised fears of a global economic downturn.
The president's attack on Apple, meanwhile, is his latest attempt to pressure a specific company to move production to the United States, following automakers, pharmaceutical companies and chipmakers. However, the United States does not produce any smartphones, even as U.S. consumers buy more than 60 million phones annually, and moving production would likely increase the cost of iPhones by hundreds of dollars.
"All the optimism over trade deals wiped out in minutes — seconds, even," said Fawad Razaqzada, market analyst at City Index and FOREX.com, in a note.
Treasury Secretary Scott Bessent suggested the 50% EU threat may end up a negotiating tactic, telling Fox News on Friday that it will hopefully "light a fire under the EU."
"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," Trump wrote on his Truth Social site. "Our discussions with them are going nowhere!"
The European Commission on Friday declined to comment on the new threat, saying it would wait for a phone call between EU trade chief Maros Sefcovic and his U.S. counterpart Jamieson Greer scheduled for Friday.
Envoys from the 27 EU countries are also due to meet on trade in Brussels later in the day.
Speaking to reporters in The Hague, Dutch Prime Minister Dick Schoof backed the EU's strategy in trade talks and said the EU was likely to see this latest announcement as part of the negotiations.
"We have seen before that tariffs can go up and down in talks with the U.S.," he said.
The White House paused most of the punishing tariffs Trump announced in early April against nearly every country in the world after investors furiously sold off U.S. assets, including government bonds and the U.S. dollar. He left in place a 10% baseline tax on most imports, and later reduced his massive 145% tax on Chinese goods to 30%.
"My base case is that they are able to reach an agreement, but I am most nervous about negotiations with European Union," said Nathan Sheets, global chief economist at Citigroup in New York.
A 50% levy on EU imports could raise consumer prices on everything from German cars to Italian olive oil.
EU's total exports to the United States last year totaled about $566 billion, led by Germany, Ireland and Italy. Pharmaceuticals, cars and auto parts, chemicals and aircraft were among the largest exports, according to EU data.
Disputes over tariffs
The White House has been in trade negotiations with numerous countries, but progress has been unsteady. Finance leaders from the Group of Seven industrialized democracies tried to downplay disputes over the tariffs earlier in the week at a forum in the Canadian Rocky Mountains.
"The EU is one of Trump's least favorite regions, and he does not seem to have good relations with its leaders, which increases the chance of a prolonged trade war between the two," said Kathleen Brooks, research director at XTB.
Bessent would not comment on other potential trade deals but said on Fox News that there would be more announced as the end of the 90-day pause on reciprocal tariffs approaches in July.
Shares in Germany carmakers and luxury companies, some of the most exposed to tariffs, fell.
Volvo Cars CEO Hakan Samuelsson told Reuters on Friday that customers would have to pay a large part of tariff-related cost increases, and that it could become impossible to import the company's smallest cars to the United States.
But he remained hopeful that a deal will soon be reached.
"It could not be in the interest of Europe or the U.S. to shut down trade between them," Samuelsson said.
Apple declined to comment on Trump's threat, which would reverse exclusions he granted on smartphones and other electronics imported largely from China in a break for Big Tech firms that sell consumer goods. Shares fell 2.4% in Friday trading.
"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," Trump said in a post on Truth Social on Friday, referring to the Apple CEO, without additional details.
Cook and Trump met on Tuesday, according to a source familiar with the situation.
Any effort to impose a tariff on Apple alone would likely face legal hurdles, according to experts.
"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," said Sally Stewart Liang, a partner at Akin Gump in Washington.
Apple is speeding up plans to make most iPhones sold in the United States at factories in India by the end of 2026 to navigate potentially higher tariffs in China.
But the odds on moving production to the U.S. are slimmer. In February, Apple said it will spend $500 billion over four years in nine American states, but that investment was not intended to bring iPhone manufacturing to the U.S.
"It is hard to imagine that Apple can be fully compliant with this request from the president in the next 3-5 years," D.A. Davidson & Co analyst Gil Luria said.
Contributing: Akash Sriram, Reinhard Becker, Brendan O'Brien, Doina Chiacu, Maggie Fick, Karen Freifeld, Josephine Mason, Siddarth S and Jaspreet Singh
