Stocks decline on Trump's tariff threats against Europe and Apple

The National

24-05-2025

Major stock indexes fell on Friday after US President Donald Trump issued his latest trade threats, recommending a tariff of 50 per cent on goods imported from the EU, starting June 1, and considering a 25 per cent tariff on any Apple iPhones made outside the US. The three major US stock indexes finished weaker. The Dow Jones Industrial Average fell 0.61 per cent, the S&P 500 dropped 0.67 per cent and the Nasdaq Composite slipped 1 per cent. For the week, the Dow lost 2.47 per cent, the S&P 500 fell 2.61 per cent and the Nasdaq shed 2.48 per cent. The dollar sank 1 per cent versus the Japanese yen, while the euro rose 0.8 per cent against the greenback. The dollar index, which measures the greenback against a basket of currencies, hit a three-week trough. For the week, the dollar was down 1.9 per cent. 'This isn't a strategic bluff – this is a destabilising threat that could do real, lasting damage,' said Nigel Green, chief executive of global financial advisory giant deVere Group. 'Markets are rightly alarmed. Beyond the short-term volatility, there's a bigger risk unfolding: the risk of recession and erosion of US credibility on the global stage.' Trump said in a post on his Truth Social network: 'The European Union, which was formed for the primary purpose of taking advantage of the United States on trade, has been very difficult to deal with.' Moody's downgraded the US credit rating late last Friday and the US House of Representatives narrowly approved Mr Trump's sweeping tax cuts on Thursday. The new tax-cut bill is expected to add almost $4 trillion to the US federal government's $36 trillion debt pile. The price of gold, a safe haven for investors, rose. Spot gold rose 2.14 per cent to $3,364.74 an ounce. Government bonds in the US climbed on safe-haven buying after sustaining heavy pressure this week from rising concerns about Mr Trump's tax cuts and the White House's ballooning debt pile. Yields move the opposite direction to prices. The 30-year US bond yield, which on Thursday hit the highest since October 2023, fell in response to fresh tariff fears. The yield was down 2.2 basis points at 5.042 per cent. The yield on benchmark US 10-year notes fell 3.6 basis points to 4.517 per cent. 'The clearest warning came from the bond market. This is capital seeking safety and that's a vote of no confidence in stability,' Mr Green said. Apple shares fell 3 per cent after Mr Trump said in a Truth Social post that he told company chief executive Tim Cook 'long ago' that 'I expect their iPhones that will be sold in the US will be manufactured and built in the US, not India, or anyplace else'. Apple is speeding up plans to make most iPhones sold in the US at factories in India by the end of 2026 to navigate potentially higher tariffs in China. The president's attack on Apple is his latest attempt to pressure a specific company to move production to the US, following car makers, pharmaceutical companies and chip makers. Moving production to the US would likely increase the cost of iPhones by hundreds of dollars. Later on Friday, Mr Trump told reporters inside the Oval Office that his proposed tariff on Apple would also apply to 'Samsung and anybody that makes that product', probably referring to smartphones. He said he expected the new phone levy to be in place by the end of June. The White House had paused most of the tariffs Mr Trump announced in early April against nearly every country. However, Mr Trump left in place a 10 per cent baseline tax on most imports and reduced the 145 per cent tax on Chinese goods to 30 per cent. 'This is bad economics and it's bad diplomacy,' the deVere chief executive said. 'You cannot keep threatening massive tariffs on allies and expect to maintain credibility. The world is watching and beginning to price in a future where US trade policy is impulsive and unreliable.' 'This kind of brinkmanship may win headlines, but over time, it weakens America's role as a trusted economic partner. You can't build lasting influence on erratic threats.' The US risks trading away long-term credibility for short-term posturing. The markets are reacting now. But the consequences could last much longer, he warned.