President Donald Trump threatened on Friday to impose a 50% customs duty on products from the European Union, citing a lack of progress in current trade negotiations.
Their strong trade barriers, value-added taxes, ridiculous corporate penalties, non-monetary trade barriers, currency manipulations, unfair and unjustified processes against American companies, and much more have led to an annual trade deficit with the US of over $250 billion, a totally unacceptable figure,” Trump wrote in a post on Truth Social on Friday morning.
"Our discussions with them (the European Union - ed.) are getting nowhere!" he added, according to CNN.
"Therefore, I recommend a direct tariff of 50% against the European Union, starting on June 1, 2025."
Olof Gill, a spokesperson for the European Commission, declined to comment immediately, mentioning that he is awaiting a phone call between European Commissioner for Trade Maroš Šefčovič and US Trade Representative Jamieson Greer. Gill did not specify when the discussion will take place.
European stock markets and the euro currency fall
Following these statements, around 12:00 GMT, the Paris stock exchange was down by 2.43%, the Frankfurt stock exchange lost 2.03%, and the Milan stock exchange was down by 2.77%. The pan-European Stoxx 600 stock index was down by 2%, as auto and bank company stocks lost over 3%.
Later, around 12:15 GMT, the CAC 40 index of the Paris stock exchange showed a decline of 3.06%, as luxury goods companies and car manufacturers were plunging. Kering shares were down by 3.90%, Hermes shares were down, and LVMH shares were down by 3.16%, all heavily dependent on the American market. At the same time, Stellantis auto group shares, also very present in the American market, were down by 4.74%.
Additionally, the euro currency fell on Friday, losing previous gains, after President Donald Trump's announcement reignited concerns about the impact of customs tariffs on the global economy and trade. After the euro rose by 0.8% against the dollar on Thursday, on Friday it was up by 0.3% to $1.1311 for one euro.
In the currency markets, the main winner was the Japanese yen, a traditional safe haven. At the last update, the US dollar was down by 0.9% against the Japanese currency, with a dollar quoted at 142.77 yen, while the euro was down by 0.56% quoted at 161.43 yen.
Broken agreement?
The tariff that Trump is considering imposing is over twice as high as the "reciprocal" 20% tariff temporarily applied in April before the American leader suspended it to allow negotiations to continue.
That pause is scheduled to expire on July 9. Since then, the only trade agreement announced has been with the United Kingdom.
Apple caught in Trump's crosshairs
American President Donald Trump intensified his rhetoric on Friday regarding trade policy, targeting even tech giant Apple.
Trump threatened to impose a 25% tariff on each iPhone sold but not produced in the US. Each year, over 60 million phones are sold in the American market, but the country does not have smartphone manufacturing capabilities.