Trump threatens a 50 percent tariff on the EU

RNZ News

23-05-2025

US President Donald Trump has threatened a 50 percent tariff on goods from the European Union.
Photo:
MANDEL NGAN / AFP
By
Elisabeth Buchwald
, CNN
US President Donald Trump on Friday threatened a 50 percent tariff on goods from the European Union, citing a lack of progress in current trade negotiations.
"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 US of more than $250,000,000 a year, a number which is totally unacceptable," he wrote in a Truth Social post Friday morning.
"Our discussions with them are going nowhere!" Trump wrote.
"Therefore, I am recommending a straight 50% Tariff on the European Union, starting on June 1, 2025."
Olof Gill, a spokesperson for the European Commission, declined to comment immediately, saying he was waiting until after a call between Maroš Šefčovič, European Commissioner for Trade, and US Trade Representative Jamieson Greer. Gill did not specify when the call is taking place. Reuters reported it was set to occur at 3am Saturday New Zealand time. A USTR spokesperson didn't respond to a CNN request for comment.
Shortly after Trump's Truth Social post on Friday morning, Treasury Secretary Scott Bessent said in a Fox News interview that the "EU proposals have not been of the same quality that we've seen from our other important trading partners."
"I'm not going to negotiate on TV, but I would hope that this would light a fire under the EU," Bessent said, adding that the "EU has a collective action problem."
The three major European stock market indexes fell sharply after Trump's post: The benchmark STOXX 600 index was down 1.7 percent. Germany's DAX fell 2.4 percent and France's CAC index slid 2.2 percent. London's FTSE index was 1 percent down. US stocks also slid, with the Dow opening lower by 480 points, or 1.15 percent.
The tariff Trump is considering slapping on the EU is more than double the size of the 20 percent initial "reciprocal" tariff that was briefly in place in April before he swiftly paused those tariffs to allow for further negotiations.
The pause is set to expire on 9 July. Since the pause, the only trade deal that's been announced is with the United Kingdom. Bessent declined to share which country could be next to ink a deal with the US. However, he said talks are "far along with India," and many Asian countries have presented "very good deals."
"There are 18 important trading partners and, I would say, with the exception of the EU, most are negotiating in very good faith," he said.
As he highlighted in his Truth Social post, the president takes particular issue with "non-monetary trade barriers," as he has repeatedly called them; as well as countries or trading blocs that run trade deficits with the US. Those occur when the US purchases more from another trading partner than that country purchases from the US.
Last year, the US ran a $236 billion trade deficit with the EU, according to US Commerce Department data. That's higher than the figures Trump cited.
Regarding non-monetary trade barriers, Trump has called out the EU for having value-added taxes (VATs) as well as digital service taxes (DSTs).
VATs are consumption taxes that are calculated such that consumers pay for all taxes that went into building the end product they purchase. However, when the EU exports goods to the US, for instance, a VAT is remitted. Meanwhile, when the US exports goods to the EU, those goods will be charged a VAT.
DSTs tax the gross revenue that online firms collect from offering services to users. A country with a DST would be able to tax all revenue collected by large companies that operate online - even if the business is unprofitable. That can include what they collect from selling data, advertising, as well as payments they receive for subscriptions, software and other kinds of online services users pay for.
American firms, namely Big Tech companies such as Meta, Apple, Google, Amazon and Microsoft, are disproportionately affected by DSTs, according to a report published last year by the nonpartisan Congressional Research Service.
Earlier this month, the EU previewed a nearly $108 billion retaliatory tariff plan "covering a broad range of industrial and agricultural products" should talks with the US go south, according to a 8 May statement from the European Commission.
European Commission President Ursula von der Leyen said in a separate statement that day that the EU made a "zero-for-zero" tariff offer and is working on a mutually beneficial solution. "But if and where negotiations fail, we also will act."
"In other words, all instruments, all options stay on the table," she said.
Irish Prime Minister Micheál Martin called Trump's threat "enormously disappointing," he said in a statement posted on X on Friday. "I welcomed the pause in tariffs until early July to allow for continued negotiations between the EU and the US, and ideally an agreed outcome."
He disputed Bessent's claim that the EU isn't negotiating in good faith, adding that "tariffs at the level suggested would not only push prices up, they would grievously damage one of the world's most dynamic and significant trading relationships, as well as disrupting wider global trade."
French Trade Minister Laurent Saint-Martin said in a Friday post on X that Trump's threats "do not help at all during the negotiation period between the European Union and the United States."
"We maintain the same stance: de-escalation but are ready to respond," he said in a post translated by CNN.
Trump's comments came after another trade-related post on Truth Social that threatened a 25 percent tariff on Apple if it continues to make the iPhone overseas.
The president met with Apple CEO Tim Cook earlier in the week - and also during his trip to the Middle East the week before. Bessent told Fox News Friday that he also spoke to Cook, and the discussions went well. So it's unclear what prompted Trump's morning trade war ramp-up.
Cook had previously said that Apple would relocate iPhone production for the United States to India from China to pay a lower tariff cost. Yet Trump last week and on Friday said he was upset that Apple wasn't making iPhones in the United States.
- CNN