Wall Street falls as Trump's EU tariff threat sparks market uncertainty
A person walks past the Wall Street sign near the New York Stock Exchange, Monday, Apr 7, 2025, in New York. (Photo: AP/Yuki Iwamura)
NEW YORK: Stock markets dropped Friday (May 23) 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 spent the entire session in the red. The biggest loser of the three was the Nasdaq, weighed down by a 3 per cent fall in Apple.
Paris and Frankfurt ended with losses of around 1.5 per cent, with shares in luxury and car companies taking a hit after Trump threatened 50 per cent tariffs on EU goods.
London's FTSE 100, which initially rose, also ended in the red.
Germany's DAX had also been higher earlier in the day as German economic growth data was revised up.
"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 per cent, 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 tariff 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 per cent Tariff on the European Union" from Jun 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 per cent tariffs on EU goods last month but suspended the measure to give space for negotiations.
Trump, however, maintained a 10 per cent levy on imports from the 27-nation bloc and nearly every other nation around the world, along with 25 per cent duties on the car, steel and aluminium industries.
He also threatened on Friday to hit Apple with a 25 per cent tariff if its iPhones are not manufactured in the United States.
Trump initially said the tariff would apply only to Apple - an unusual move in singling out a specific company in trade policy.
However, he later expanded the threat to include all smartphone manufacturers, telling reporters the levy could also hit Samsung.
Trump's social media outburst rocked stock markets, which had steadied following losses over concerns about the ballooning US debt and rising US borrowing costs.
