Trump Threatens Major Tariffs on EU Goods and iPhones, Sending Markets into a Tailspin
On Friday, U.S. President Donald Trump once again threatened to escalate the trade conflict, proposing a 50% tariff on goods from the European Union starting June 1. He also warned Apple (NASDAQ:AAPL) that iPhones made outside the U.S. could be hit with a 25% tariff.
These announcements, made via social media, shook global markets that had recently experienced some relief from weeks of easing trade tensions. Early trading saw the S&P 500 drop 1.2%, the Nasdaq fall 1.5%, and European stocks slide 1.7%.
German automakers and luxury brands, which are particularly vulnerable to tariffs, were notably affected. Shares of Porsche, Mercedes, and BMW (ETR:BMWG) fell between 2% and 4.5%. EssilorLuxottica, a luxury eyewear firm, saw its stock decline by 5.5%.
Apple shares dropped 3.7% in premarket trading, along with other leading tech companies. Trump gave no specific timeline for the potential Apple tariff. Despite selling over 60 million smartphones annually in the U.S., the country currently lacks domestic production facilities for smartphones.
Trump criticized the EU on his Truth Social account, accusing it of being created to exploit the U.S. through trade and claimed negotiations were stagnant.
The European Commission chose not to respond immediately to Trump’s tariff threats, awaiting a scheduled discussion between EU trade chief Maros Sefcovic and U.S. trade representative Jamieson Greer.
EU exports to the U.S. totaled about €500 billion last year, with Germany, Ireland, and Italy as the top contributors. Key export sectors included pharmaceuticals, automobiles, chemicals, and aircraft.
Kathleen Brooks, research director at XTB, noted Trump’s hostile stance towards the EU could lead to an extended trade conflict. German car manufacturers, which lack U.S. production, could be forced to hike prices or offer smaller discounts. Some, like Audi and Volvo (OTC:VLVLY), are already shifting parts of their production.
Volvo CEO Hakan Samuelsson warned that tariffs might make it unviable to sell smaller cars in the U.S. but remained optimistic a trade resolution could be reached soon.
Earlier in April, Trump’s widespread tariffs—including a 145% levy on Chinese imports—spooked investors and undermined confidence in U.S. markets, although some tariffs were later paused. The administration has since kept in place a 10% duty on most global imports and 30% on Chinese goods.
G7 finance leaders tried to downplay tariff disputes during recent talks in Canada, but Friday’s developments erased prior market optimism, noted analyst Fawad Razaqzada.
Trump Singles Out Apple
Trump reiterated that he has previously told Apple CEO Tim Cook that iPhones sold in the U.S. should be made domestically. He said if production is outsourced, Apple should face at least a 25% tariff. Apple declined to comment.
Although the White House has previously allowed tariff exemptions for some electronics—benefiting Apple and other tech firms—Apple is accelerating its shift to produce iPhones in India, targeting the end of 2026 for most U.S.-bound devices.
Commerce Secretary Howard Lutnick and others have also pressed Apple to manufacture in the U.S. In February, Apple pledged $500 billion over four years to expand its American workforce and facilities but did not commit to relocating iPhone production.
Apple recently stated that most of its U.S. sales this quarter would be supplied by Indian factories. However, analysts like Gil Luria from D.A. Davidson & Co suggest that Apple may struggle to fully meet Trump’s demands within the next few years.
