Stock markets fall as Trump threatens tariffs on EU, Apple

Daily Tribune

24-05-2025

🔹 Investors were already on edge after Moody's stripped the United States of its top-tier credit ratings
🔹 Independent analysts warn Trump's tax package would increase the deficit by as much as $4 trillion over a decade
🔹 Trump threatens 25% tariff if iPhones not made in US
🔹 Trump fires new 50% tariff threat at EU, drawing stiff response
Stock markets fell back yesterday after US President Donald Trump ended a lull in his trade war with threats of massive tariffs on Apple products and imports from the European Union.
Wall Street's main indexes were all down around 1% two hours into trading, with the tech-heavy Nasdaq at one stage losing 1.5% before rallying, while Apple shares sank 2.5%.
Paris and Frankfurt ended with losses of around 1.5%, paring earlier losses, with shares in luxury and car companies taking a hit after Trump suggested he would hit the EU with 50% tariffs. London's FTSE 100, which initially rose, also ended in the red.
Germany's DAX had been higher earlier in the day as German economic growth data was revised upward.
'What is somewhat of a surprise is the fact that the EU will now face a considerably higher tariff rate than China, an almost unthinkable scenario just a matter of weeks ago,' said Lindsay James, investment strategist at Quilter.
'It is highlighting that much of this policy is designed to be punitive, rather than having any economic credibility to it.'
Oil prices rebounded, meanwhile, having earlier dropped by around 1%, while the dollar remained under pressure.
Trump's new threats revived investor concerns about his trade policies after a recent deal with Britain and a tariffs truce with China.
'All the optimism over trade deals wiped out in minutes –– seconds, even,' said Fawad Razaqzada, market analyst at StoneX.
Trump said on his Truth Social platform that he was 'recommending a straight 50% Tariff on the European Union' from June 1 as 'discussions with them are going nowhere!'
'The EU is one of Trump's least favourite regions, and he does not seem to have good relations with its leaders, which increases the chance of a prolonged trade war between the two,' said Kathleen Brooks, research director at trading platform XTB.
The US president had announced 20% tariffs on EU goods last month but suspended the measure to allow negotiations. However, he maintained a 10% levy on imports from the 27-nation bloc and nearly every other nation, along with 25% duties on cars, steel, and aluminium.
He also threatened on Friday to hit Apple with a 25% tariff if its iPhones are not manufactured in the United States.
'Trump's attack on Apple looks like one of his negotiating tactics to us,' Brooks said, noting that the threat comes as his tax-cut plan faces Senate debate after passing the House of Representatives.
Trump's social media outburst rocked stock markets, which had steadied after recent losses tied to concerns over ballooning US debt and rising borrowing costs.
Investors were already jittery after Moody's downgraded the United States' credit rating and the House approved Trump's tax cut plan, which critics say would swell the national debt.
The yield—or borrowing cost—on 10-year and 30-year US government bonds surged this week amid fears about the fiscal health of the world's biggest economy. The yields eased late Thursday.
Trump's tax package, now headed to the Senate, has drawn scepticism from fiscal conservatives who warn the country is veering toward bankruptcy. Independent analysts estimate the plan would increase the deficit by as much as $4 trillion over a decade, though the White House insists it will spur economic growth of up to 5.2%—projections far above mainstream consensus.