The simmering trade conflict between the United States and the European Union escalated sharply when President Donald Trump announced plans to impose a 50% tariff on all EU goods entering the U.S. starting June 1, alongside a potential 25% tariff on iPhones not made domestically.
The announcement came just hours before scheduled trade negotiations, casting a shadow over talks and rattling markets on both sides of the Atlantic.
Trump’s move marks a significant escalation from his earlier announcement of a 20% tariff on EU products, which he temporarily halved to 10% until early July to allow negotiations, the BBC reported.
An Unfolding Trade Standoff
The European Union, one of the United States’ largest trading partners, has yet to issue a formal response to the tariff threat. Analysts emphasize that, at this stage, the move remains a warning rather than a formal policy change.
Still, the EU has signaled its resolve to stand firm and maintain its course in the talks, with officials emphasizing a preference for de-escalation while preparing to respond if necessary.
Read more: Trump Escalates Trade War Talk With 50% Tariff Proposal on EU
Global Market Reaction
Global markets reacted swiftly to the renewed tariff threat. U.S. stocks fell, with the S&P 500 declining about 1%, while major European indexes such as Germany’s DAX and France’s CAC 40 dropped more than 1.5%.
Apple shares, which had recently been exempted from earlier tariff plans, opened over 2% lower amid the threat of a new 25% import tax on iPhones made outside the U.S.
Since returning to the office, Trump has used tariffs to bolster U.S. manufacturing and protect domestic jobs. However, these measures have repeatedly raised concerns worldwide about the potential to increase costs and disrupt global supply chains.
Trade Deficit and Non-Monetary Barriers
Trump’s grievances focus heavily on what he sees as unfair trade practices by the EU, particularly the persistent U.S. trade deficit with the bloc.
Last year, the U.S. recorded a trade deficit of around $236 billion with the EU, the BBC reported. EU officials have warned that they are prepared to retaliate if the talks collapse.
Earlier this month, the European Commission reportedly unveiled plans for nearly $108 billion in counter-tariffs on a wide range of American industrial and agricultural products.
President Trump has also singled out Apple as a company he wants to see manufacturing more products within the U.S. Despite meetings with CEO Tim Cook and recent shifts in production away from China, Apple’s decision to move much of its assembly to countries like India and Vietnam rather than the U.S. has drawn criticism.
Trump warned that a 25% tariff on iPhones made overseas could come into effect if this trend continues.