Trump: I'm recommending a 50% tariff on the EU
Newsflash: Donald Trump has just announced he is recommending a 50% tariff on goods from the Europen Union, from the start of next month.
Ratcheting up the trade war, Trump has claimed in a Truth Social post that the EU has been ‘very difficult’ to deal with, and that the current US trade in goods deficit is “totally unacceptable”.
Trump also claims that the EU was set up to take advantage of the US on trade.
He says:
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.
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 U.S. of more than $250,000,000 a year, a number which is totally unacceptable. Our discussions with them are going nowhere!
Therefore, I am recommending a straight 50% Tariff on the European Union, starting on June 1, 2025. There is no Tariff if the product is built or manufactured in the United States. Thank you for your attention to this matter!
UPDATE: Donald Trump’s claim that the US has a trade deficit with the EU of “more than $250,000,000 a year” actually understates the situation. The president may have his millions and billions mixed up.
According to the Office of the United States Trade Representative, the U.S. goods trade deficit with the European Union was $235.6bn in 2024, not over $250m as Trump suggests….
Key events
Shares are recovering some ground in London in afternoon trading, as investors digest today’s trade war flare ups.
The FTSE 100 index is now only down 36 points, or -0.4%, at 8702 points, having briefly flirted with a triple-digit fall after Trump’s dual tariff threats directed at the EU and Apple.
So, what is the European trade proposal that has failed to impress Donald Trump?
Bloomberg reported earlier this week that the EU had shared a revised trade proposal with the US which included proposals on international labor rights, environmental standards, economic security and gradually reducing tariffs to zero on both sides for non-sensitive agricultural products as well as industrial goods.
Sent to officials in Washington earlier this week, the paper also outlines mutual investments and strategic procurement in energy, artificial intelligence and digital connectivity, Bloomberg added.
More here.
The International Chamber of Commerce, which represents businesses around the world, are critical of Donald Trump’s proposed 50% tariff on EU imports.
John Denton, secretary general of the International Chamber of Commerce, is calling on both sides to ‘de-escalate’ the situation:
“The proposed tariff hike on EU imports introduces major uncertainty into one of the most stable and integrated trade relationships in the world. The immediate effect — for businesses on both sides of the Atlantic — will be to further chill investment decisions, disrupt essential supply chains and undermine market confidence.
“The transatlantic relationship is not only of immense economic importance — it is, in many ways, the cornerstone of the rules-based global trading system. For decades, EU-U.S. trade has set an important standard for openness, reliability and shared prosperity. A sharp escalation in tariffs between two central pillars of the global economy risks sending shockwaves through the global business community at a time when stability is at an absolute premium.
“We call on the U.S. and EU to redouble ongoing efforts to renew their trade relationship. A swift and coordinated de-escalation is essential to preserve the trust and stability that underpin international commerce, business investment and job creation.”
Professor: No winners in Trump’s irrational trade wars.
A “random” tariff rate of 50% on the European Union will harm everyone, points out Professor Costas Milas, of the University of Liverpool’s management school.
He tells us:
Initially, Trump imposed a “reciprocal” (sic) tariff rate of 20% on EU imports. The idea was that through “adult” bargaining and economic reasoning, this very tariff rate would be pushed down. Now, Trump threatens a tariff rate of 50% on EU imports.
What he has certainly managed (again) is to “hit” the weekend headlines of all newspapers and economic broadcasters. Policymakers around the world can either ignore yet another “economic tantrum” of the U.S. President or ask their economic analysts to re-run their quantitative models to find out that a 50% tariff rate will hit both U.S. and EU economic output. Policymakers and analysts do not have to rerun their models.
It is obvious that by imposing, even for a very short period of time, “random” tariff rates of 50% or higher, economic uncertainty will make businesses invest less and consumers spend less. That is, there will be no winner out of Trump’s irrational trade wars.
If trade talks were a game of tennis, then Trump has put the ball firmly back in Europe’s court.
The bloc must now choose whether to retaliate with counter-tariffs or accede to US demands to make concessions, points out the Financial Times, adding:
Member states have approved a €21bn package of up to 50 per cent tariffs on items such as maize, wheat, motorcycles and clothing — measures that at present are not due to take effect until July 14 but could be quickly deployed.
The European Commission is still consulting on a bigger €95bn list of possible measures, which includes Boeing aircraft, cars and bourbon whiskey.
The Russell 2000 index, which tracks the share prices of small US companies, has dropped by 1% on the back of Donald Trump’s new tariff threats.
Bessent: Trump tariff threat may light a fire under EU in trade talks
Treasury Secretary Scott Bessent has claimed that the EU is failing to match other trading partners, in its negotiations with the US.
Speaking to Fox News, Bessent says that Donald Trump believes the EU proposals for a trade deal have not been of the same quality as other trade partners.
Countries in Asia have “moved forward with some very interesting proposals”, and are negotiating in good faith, since Trump paused his new tariffs on trading partners for 90 days, Bessent says, adding:
“I think this is in reponse just to the EU’s pace.”
Bessent adds that he hopes Trump’s threat of a 50% tariff would “light a fire under the EU”.
He claims that the EU has a “collective action problem”, as 27 countries are being represented by one group in Brussels.
Some of those countries don’t even know what the EU is negotiating on their behalf, Bessent suggests.
50% TARRIF ON E.U.🚨
🔥Scott Bessent explains the jump: “This is in response to the E.U.'s pace.”
“E.U. has a collective action problem…it's 27 countries but they're being represented by 1 group in Brussels. The underlying countries don’t even know what the E.U. is… pic.twitter.com/2tv5v3tAu7
— Townhall.com (@townhallcom) May 23, 2025
Apple is leading the fallers on the Dow Jones Industrial Average in early trading, down by 2.3% after Donald Trump threatened the iPhone maker with 25% tariffs on products made abroad.
Wall Street has opened with a bump, as news of Donald Trump’s fresh tariff threats against the European Union worry investors.
The Dow Jones industrial average, which tracks 30 large US companies, has dropped by 366 points, or 0.87%, in early trading to 41,492 points.
The broader S&P 500 index of US stocks is down 0.9%, while the tech-focused Nasdaq index has lost 1.2%.
Apple may need to change its strategy as Donald Trump threatens new tariffs on iPhones made overseas, suggsts Ben Barringer, global technology analyst at investment manager Quilter Cheviot:
“Apple has been at the eye of the tariff storm ever since Donald Trump announced his intentions on global trade. The tech giant has a deeply ingrained supply chain in Asia, and that is going to be very difficult for it to extricate itself from. Indeed, Apple hoped it could get around the worst of the tariffs by shipping iPhone products to the US from India and Vietnam. Unsurprisingly the US administration has not looked kindly on such tactics and is now threatening new tariffs.
“Given the deal with China, Apple will have been hoping that tensions with the US government would begin to ease, but this has appeared to be a false dawn. To date, Apple have said it is not seeing any stockpiling or pull forward of sales, as well as no change to its pricing strategy. Given the renewed rhetoric coming from Trump, this position may need to change, and greater consideration given to either upping prices, moving supply chains or ultimately both.”
President Trump’s threat of a 50% tariff on EU imports from 1 June may well turn out to be a negotiating tactic, suggests consultancy Capital Economics.
They suggest it is “very unlikely” to be where tariffs settle over the long run, but add:
If it were implemented it could result in a substantial fall in GDP in Germany and potentially even higher in Ireland if pharmaceuticals were included.
XTB: Trump ramps up tariff threats once more
The stock market rally is over as we head into the long weekend, report Kathleen Brooks, research director at XTB.
She reports:
President Trump has proposed a 50% tariff on all EU imports from June 1st, which leaves just over a week for the EU and the US to reach an agreement to avert this devastating levy on the EU.
Is the President using tariffs as another negotiating tactic, to force the EU to cede to his demands? Or is this a sign that negotiations since mid-April have failed, and we should expect tit for tat threats from the EU later today? We expect it is a mixture of both. 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.
The immediate market reaction has been a nosedive in stocks. The Eurostoxx 50 is down 2.3%, the Dax is down nearly 2% and the Cac is lower by 2.2%. This lurch to the downside has pushed European indices into a losing streak for this week, and European indices are currently underperforming US stocks.
The FTSE 100 is the outperformer so far on Friday, it is down by 1%, as the UK/ US trade agreement acts as a protection against US trade aggression.
Here’s some snap reaction to Donald Trump’s threat to impose a 50% tariff on EU imports, starting with BBC economics editor Faisal Islam…
This will obviously be v bad for the world economy, incredible to think that within days China could be on 10% and the EU on 50%… but it also puts the UK in a strong position, relatively speaking… even just avoiding all this random uncertainty…. pic.twitter.com/zzEWSd8A3H
— Faisal Islam (@faisalislam) May 23, 2025
….economics professor Justin Wolfers…
The single most reliable economic fact of the Trump presidency is that when he raises tariffs, markets tank. When he backs off, they rise.
This matters because markets are assessing the future profitability of American business and any tariffs benefits are downstream of boosting… pic.twitter.com/UkAKAC0MJj
— Justin Wolfers (@JustinWolfers) May 23, 2025
… analyst Ian Bremmer…
…and hedge fund manager Benn Eifert…
True alpha: a real time Bessent-Lutnick-Navarro tracking device series so you can tell when Bessent is in Trump's office without Navarro convincing him to tweet about how he won the trade war and doesn't need 50% tariffs on the EU anymore
— Benn Eifert 🥷🏴☠️ (@bennpeifert) May 23, 2025
Wall Street is set to slump when trading begins.
The Dow Jones industrial average is down 1.5% in premarket trading, with the tech-focused Nasdaq on track for a 1.9% drop,
