Donald Trump said he would impose a 50% tariff on all EU imports into the US from June 1 after he said trade talks between the two trade areas “doesn’t go anywhere.”
In a surprising announcement, the US President posted on his true social platform that his long-term fight to secure concessions from the EU had been running badly.
He accused the EU of using the US in trade, saying, “There’s no discussion with them anywhere! Therefore, I’m recommending a straight 50% tariff on the European Union from June 1, 2025.”
The stock market fell in response to the post as S&P 500 futures fell 1.5% before the New York market opened. The Stoxx Europe 600 index fell 1.7%.
The US imposed a 20% “mutual” rate on most EU products on April 2, but after a week it halved that rate until July 8, allowing time for consultation. It holds a 25% import tax on steel, aluminum and vehicle parts, threatening similar behavior on pharmaceuticals, semiconductors and other goods.
“This is a major escalation of trade tensions,” said Holger Schmeading, chief economist in Belenberg on Friday. “In Trump’s case, you never know, but this is going to be a big escalation. The EU has to respond, and that really hurts the US and the European economy.”
EU negotiators have been locked up in meetings with White House representatives since Trump’s “liberation day” tariffs were first announced. Dozens of countries have been debating to try and defeat their taxes before the 90-day suspension.
The White House has tolerated many of the most troublesome tariffs, including reducing total tariffs on Chinese goods from 145% to 30% after Trump declared it to be a constructive talks with Beijing, and reduced the retaliatory border tax from 125% to 10%.
A week ago, the US president appeared to acknowledge Washington’s lack of ability to negotiate transactions with many countries at once, and said the US would instead send letters to some trading partners to unilaterally impose new tariff charges.
The perception of easing a hard-hit approach to trade has resulted in a mild period in the stock market, but in addition to the threat of 50% collection on EU goods on Friday, another threat has led to the same day of tariffs on iPhones made overseas, ending the peace.
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The EU presented a new trade proposal to the US on Thursday. The offer included gradual tariff reductions on non-sensitive products, as well as cooperation between energy, AI and digital infrastructure. Brock was ready to approximately $108 billion in retaliatory tariffs if the speech failed.
According to the Financial Times, EU officials were willing to extend the 2020 tariff-free arrangement on US lobster imports to sweeten the deal. However, it appears to have proven insufficient to persuade the US president to sign a transaction that allows only 10% universal tariffs that can be applied to the EU, as well as the UK.