Donald Trump has said he will impose a 50% tariff on all EU imports to the US from 1 June after claiming trade talks between the two trading blocs were “going nowhere”.
In a surprise announcement, the US president posted on his Truth Social platform that his long-running battle to secure concessions from the EU had stalled.
He accused the EU of taking advantage of the US on trade, saying: “Our discussions with them are going nowhere! Therefore I am recommending a straight 50% Tariff on the European Union, starting on June 1, 2025.”
Stock markets slumped in response to the post, with S&P 500 down by 1% and the tech-heavy Nasdaq down 1.3% on opening. The STOXX Europe 600 index fell by 1.7%. In London the FTSE 100 closed down 0.2% after initially dropping as much as 1.5%. Germany’s car makers were particularly hard hit, with BMW down 3.7%, Volkswagen off 2.6% and Mercedes-Benz down 4%.
The US imposed a 20% “reciprocal” rate on most EU goods on 2 April, but halved that rate a week later until 8 July to allow time for talks. It has retained 25% import taxes on steel, aluminium and vehicle parts and is threatening similar action on pharmaceuticals, semiconductors and other goods.
“This is a major escalation of trade tensions,” said Holger Schmieding, the chief economist at Berenberg, on Friday. “With Trump you never know but this would be a major escalation. The EU would have to react and it is something that would really hurt the US and European economy.”
“I would hope that this would light a fire under the EU,” said the US treasury secretary, Scott Bessent. “The 90-day pause on the April 2 tariffs was based on countries or trade blocs coming to us and negotiating in good faith,” Bessent told Fox News. He said the EU’s proposals “have not been of the same quality” as those from other trading partners.
EU negotiators have been locked in meetings with White House representatives since Trump’s so-called “liberation day” tariffs were first announced. Dozens of countries have been holding discussions to try to bring down their own levies before the 90-day pause elapses.
The White House has relented on many of its most onerous tariffs, including lowering total tariffs on Chinese goods from 145% to 30% after what Trump declared were constructive talks with Beijing, which lowered its retaliatory border taxes from 125% to 10% in response.
A week ago the US president appeared to acknowledge that Washington lacked the ability to negotiate deals with scores of countries at once, saying the US would instead send letters to some trading partners to unilaterally impose new tariff rates.
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Perceptions of an easing back on a hardline approach to trade brought a period of calm to stock markets, but Friday’s threat of a 50% levy on EU goods, plus a separate threat made the same day of 25% tariffs on iPhones made abroad, have brought an end to the peace.
The EU presented a fresh trade proposal to the US on Thursday. The offer included phased tariff cuts on non-sensitive goods, plus cooperation on energy, AI and digital infrastructure. The bloc was readying about $108bn in retaliatory tariffs if talks failed.
To sweeten the deal, EU officials were also willing to extend a 2020 tariff-free arrangement on US lobster imports, according to the Financial Times. But it appears to have proved insufficient to persuade the US president to sign a deal allowing only his 10% universal tariff to apply to the EU, as it does the UK.
