US President Donald Trump threatened on Friday to ratchet up his trade war once again, pushing for a 50% tariff on European Union goods starting June 1 and warning Apple he may slap a 25% levy on all iPhones bought by US consumers.
The twin threats, delivered via social media, roiled global markets after weeks of de-escalation had provided some reprieve. The S&P 500 fell 1% in early trading, the Nasdaq fell 1.2%, and European shares fell 1.5%.
Trump's broadside against the EU was prompted by the White House's belief that negotiations with the bloc are not progressing fast enough. But his saber-rattling also marked a return to Washington's stop-and-start trade war that has shaken markets, businesses and consumers and raised fears of a global economic downturn.
The president's attack on Apple, meanwhile, is his latest attempt to pressure a specific company to move production to the United States, following automakers, pharmaceutical companies and chipmakers. However, the United States does not produce any smartphones - even as US consumers buy more than 60 million phones annually - and moving production would likely increase the cost of iPhones by hundreds of dollars.
"All the optimism over trade deals wiped out in minutes – seconds, even," said Fawad Razaqzada, market analyst at City Index and FOREX.com, in a note.
US Treasury Secretary Scott Bessent told Fox News on Friday that the 50% EU threat will hopefully "light a fire under the EU," adding that other countries have been negotiating with Washington in good faith.
"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," Trump wrote on his Truth Social site. "Our discussions with them are going nowhere!"
The European Commission on Friday declined to comment on the new threat, saying it would wait for a phone call between EU trade chief Maros Sefcovic and his US counterpart Jamieson Greer scheduled for Friday.
Envoys from the 27 EU countries are also due to meet on trade in Brussels later in the day.
Speaking to reporters in The Hague, Dutch Prime Minister Dick Schoof said he agreed with the EU's strategy in trade talks with the United States, and said the EU would likely to see this latest announcement as part of the negotiations.
"We have seen before that tariffs can go up and down in talks with the US," he said.
The White House paused most of the punishing tariffs Trump announced in early April against nearly every country in the world after investors furiously sold off US assets including government bonds and the U.S. dollar. He left in place a 10% baseline tax on most imports, and later reduced his massive 145% tax on Chinese goods to 30%.
"My base case is that they are able to reach an agreement, but I am most nervous about negotiations with European Union," said Nathan Sheets, global chief economist at Citigroup in New York.
A 50% levy on EU imports could raise consumer prices on everything from German cars to Italian olive oil.
EU's total exports to the United States last year totaled about 500 billion euros ($566 billion), led by Germany (161 billion euros), Ireland (72 billion euros) and Italy (65 billion euros). Pharmaceuticals, cars and auto parts, chemicals and aircraft were among the largest exports, according to EU data.
The White House has been in trade negotiations with numerous countries, but progress has been unsteady. Finance leaders from the Group of Seven industrialized democracies tried to downplay disputes over the tariffs earlier in the week at a forum in the Canadian Rocky Mountains.
"The EU is one of Trump's least favorite 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 XTB.
Shares in Germany carmakers and luxury companies, some of the most exposed to tariffs, fell on the threats.
Volvo Cars CEO Hakan Samuelsson told Reuters on Friday that customers would have to pay a large part of tariff-related cost increases, and that it could become impossible to import the company's smallest cars to the United States.
But he remained hopeful that Europe and the United States will soon come to an agreement.
"It could not be in the interest of Europe or the US to shut down trade between them," Samuelsson said.
Apple declined to comment on Trump's threat, which would reverse exclusions he granted on smartphones and other electronics imported largely from China, in a break for Big Tech firms that sell consumer goods. Shares fell 2.5% in Friday trading.
"I have long ago informed Tim Cook of Apple that I expect their iPhones that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else," Trump said in a post on Truth Social on Friday, referring to the Apple CEO, without additional details.
Any effort to impose a tariff on Apple alone would likely face legal hurdles, according to experts.
"There's no clear legal authority that permits company specific tariffs, but the Trump administration may try to shoehorn it under its emergency power authorities," said Sally Stewart Liang, a partner at Akin Gump in Washington. Company-specific tariffs would require long investigations, such as those on anti-dumping, Liang said.
Apple is speeding up plans to make most iPhones sold in the United States at factories in India by the end of 2026 to navigate potentially higher tariffs in China.
But the odds on moving production to the US are slimmer. In February, Apple said it will spend $500 billion over four years in nine American states, but that investment was not intended to bring iPhone manufacturing to the US.
"It is hard to imagine that Apple can be fully compliant with this request from the president in the next 3-5 years," DA Davidson & Co analyst Gil Luria said.
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