US President Donald Trump on Friday threatened a 50% tax on all imports from the European Union.
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 the 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.
