Markets Drop on Trump’s Latest Tariff Threats

Politics|Markets Drop on Trump’s Latest Tariff Threats

Stock markets dropped on Friday after President Trump threatened the European Union and Apple with steep tariffs.

The S&P 500 fell more than 1 percent as trading began in New York. The pan-European Stoxx 600 index fell by a similar amount, with shares of carmakers, banks and tech companies among the hardest hit.

Apple’s stock dropped nearly 3 percent, a move erasing tens of billions of dollars in market value from the tech giant.

On Friday morning, President Trump wrote on social media that trade negotiations with the European Union were “going nowhere” and called for a 50 percent tariff on all goods imported from the bloc starting June 1.

“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,” Mr. Trump wrote on Truth Social.

In a separate post, he said that he wanted iPhones sold in the United States to also be made in the country. “If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S.,” he said.

The S&P 500, the benchmark stock index in the United States, was already on track for its worst week since the beginning of April, when Mr. Trump announced so-called reciprocal tariffs on dozens of countries. After he paused those tariffs for 90 days to give time for negotiations, the market turmoil eased somewhat, but traders have remained jittery.

This week, the Trump administration’s bill to cut taxes raised concerns about U.S. debt levels, keeping markets on edge.

U.S. government bond yields, which had been rising in recent weeks on worries over debt and deficits, reversed course, a sign that fears about the economic effects of an escalating trade war were driving trading on Friday. The yield on 10-year Treasury notes fell to 4.50 percent.

Treasury Secretary Bessent said on Fox News Friday morning that the president was frustrated with trade talks with the European Union and that he hoped the new threat would “light a fire under the E.U.”

Several analysts said they didn’t expect the 50 percent tariffs to be put in place for long, if at all, because they would also harm the U.S. economy. Instead, they argued that these threats would lead to an agreement, after a similar pattern of U.S. talks with other countries, such as China.

“Experience in recent months suggests that an agreement will ultimately be reached,” economists at Commerzbank wrote, adding that they expected the existing 10 percent “base line” tariff to remain on most products.

The United States imported goods worth more than $600 billion from the European Union last year.

“This latest pronouncement is likely just another step in the volatile trade negotiations,” Salomon Fiedler, an economist at Berenberg, said of Mr. Trump’s tariff comments. “Given the damage the U.S. would do to itself with this tariff, he will probably not follow through.”