Trump’s new tariff threats targeting EU, Apple quash market recovery
KEY POINTS
- President Trump posted tariff warnings on Friday targeting the EU and Apple.
- Trump says EU trade talks have stalled and the coalition was formed to “take advantage” of U.S. on trade.
- Friday’s tariff pronouncements were dragging down U.S. investment markets and value of the dollar.
President Donald Trump launched a pair of fresh tariff threats via social media Friday, signaling a new 50% trade levy on import goods from the European Union could be assessed in a matter of days and a tariff of “at least 25%” on Apple iPhones manufactured outside the U.S. may also be in the works.
In a posting to Truth Social, Trump reeled off a lengthy list of fees he says the EU is attaching to U.S. import goods, accused the coalition of European nations of taking advantage of the U.S. and said current trade negotiations were at a standstill.
“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. “Their powerful Trade Barriers, Vat Taxes, ridiculous Corporate Penalties, Non-Monetary Trade Barriers, Monetary Manipulations, unfair and unjustified lawsuits against Americans Companies, and more, have led to a Trade Deficit with the U.S. of more than $250,000,000 a year, a number which is totally unacceptable. Our discussions with them are going nowhere!
“Therefore, I am recommending a straight 50% Tariff on the European Union, starting on June 1, 2025. There is no Tariff if the product is built or manufactured in the United States. Thank you for your attention to this matter!”
Following a meeting earlier this week with Apple CEO Tim Cook, Trump revisited his previous criticisms of the U.S. computer and digital device giant and said a hefty new trade fee could be coming for Apple’s most popular product, the iPhone.
“I have long ago informed Tim Cook of Apple that I expect their iPhone’s 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 wrote in a separate Truth Social posting Friday. “If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S.”
How investment markets reacted to Friday tariff news
Trump’s new tariff pronouncements come amid a pair of 90-day pauses on a raft of reciprocal tariffs announced in early April as well as a retaliatory levy of 145% on Chinese goods that was temporarily reduced to 30% earlier this month.
While the most severe of Trump’s tariff assessments are paused, a 10% blanket levy on international imports remains in place as do sector-specific import fees on steel, aluminum, automobiles and auto parts as well as tariffs on import goods from Mexico and Canada not covered by the United States-Mexico-Canada Agreement, which took effect in 2020.
Trump’s tariff pauses had helped drive widespread recovery in U.S. financial markets over recent weeks but negative investor reaction to the president’s latest comments dragged the major U.S. stock indexes down Friday and pushed the value of the U.S. dollar lower.
Industry experts say the positive momentum has been quashed by the latest tariff rumblings.
“We’ve had this de-escalation tailwind at the market’s back for like six weeks now — and the market has had one of its best six-week stretches in the last 75 years — and a re-escalation of trade war rhetoric threatens that,” Ross Mayfield, investment strategist at Baird told CNBC on Friday. “I don’t think we’ll retest the lows or anything like that, unless it really ramps up, but this is certainly a step in the wrong direction from the market’s perspective.”
Even amid the tariff pauses, U.S. fees on import goods are at the levels not seen in decades. Economists say average tariffs are now at about 18%, roughly six times higher than before Trump took office and the highest in about 90 years.
Tariffs already driving up prices
Ahead of Trump’s trade comments Friday, a growing list of U.S. retailers had already been signaling coming price increases driven by new tariff fees, including the world’s largest retailer.
Last week, Walmart CEO Doug McMillon said the store, which reported over $685 billion in revenues over the 12 months ending on April 30, was unable to absorb the added costs of the new trade levies.
“Given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure given the reality of narrow retail margins,” McMillon said on an earnings call last Thursday. “The higher tariffs will result in higher prices.”
Other companies that have signaled coming tariff-related price increases include Ford, Volkswagen, Best Buy, Target and Procter & Gamble.