Donald Trump has warned of plans to impose a 50 per cent tariff on imports from the EU from next month, adding that talks with the bloc are “going nowhere” as he increases his threat to upend global trade.
The move escalates the trade war with the EU barely two weeks after the US agreed with China to slash tariffs in a pact that comforted global investors.
It also highlights the animosity that the Trump administration has shown towards Brussels since the US president’s return to the White House in January.
In a post on his Truth Social platform on Friday, Trump attacked the bloc for “Trade Barriers, VAT Taxes, ridiculous Corporate Penalties, Non-Monetary Trade Barriers, Monetary Manipulations, [and] unfair and unjustified lawsuits against Americans Companies”.
He added: “Our discussions with them are going nowhere! Therefore I am recommending a straight 50% Tariff on the European Union, starting on June 1, 2025.”
Such a level would be more than double the tariff rate the US president announced for the EU on his self-styled “liberation day” on April 2.
Capital Economics, a consultancy, said that, if implemented, a US 50 per cent tariff on EU imports could reduce German GDP by 1.7 per cent over three years and lower Ireland’s by 4 per cent.
Stock markets sank following Trump’s post, with the S&P 500 1.1 per cent lower in early trading on Wall Street. The Stoxx Europe 600 index fell 1.3 per cent.
Equity markets had recovered from the rout that followed “liberation day”, helped by moves such as Trump’s climbdown on China, but were rocked by his latest trade salvo.
The president’s move “puts a dent in the view that markets will rein in Trump”, said Andrew Pease, chief investment strategist at Russell Investments.
US trade representative Jamieson Greer is due to talk to EU trade commissioner Maroš Šefčovič later on Friday.
The US imposed a 20 per cent “reciprocal” rate on most EU goods in April, but halved it until July 8 to allow time for talks. It has retained 25 per cent levels on steel, aluminium and car parts and is promising similar action on pharmaceuticals, semiconductors and other goods.
The bloc must now choose whether to retaliate with counter-tariffs or accede to US demands to make concessions.
Member states have approved a €21bn package of up to 50 per cent tariffs on items such as maize, wheat, motorcycles and clothing — measures that at present are not due to take effect until July 14 but could be quickly deployed.
The European Commission is still consulting on a bigger €95bn list of possible measures, which includes Boeing aircraft, cars and bourbon whiskey.
As European markets were by hit by Trump’s latest threat, exporters and stocks linked to the health of the economy such as banks were particularly affected.
Carmaker Stellantis dropped 3.5 per cent while Deutsche Bank shed 5 per cent.
Traders moved to price in faster interest rate cuts from the European Central Bank to support a tariff-hit economy.
The chance of a third quarter-point rate cut by the end of this year rose to more than 50 per cent compared with roughly 15 per cent earlier on Friday, according to levels implied by swaps markets.
“This is a reminder that the trade uncertainty is in no way over,” said Kasper Elmgreen, chief investment officer for fixed income and equities at Nordea Asset Management. “Every day that we don’t have a deal, we risk serious economic damage.”
US officials have been frustrated by the EU’s failure to offer the kind of concessions other countries have, with Howard Lutnick, US commerce secretary, saying on Thursday that Brussels was “impossible” to negotiate with.
Washington wants Brussels to reduce import barriers to diminish the size of the US’s trade deficit in goods with the bloc, which totalled $192bn in 2024.
The Trump administration considers EU food and product standards protectionist and wants the bloc to unilaterally drop tariffs. The EU has proposed that both sides scrap tariffs on all industrial and some agricultural products.
Brussels has also offered to help tackle Chinese overcapacity in sectors such as steel and cars, and to discuss restrictions on exporting technology to Beijing.
But it has refused to discuss scrapping national digital taxes or VAT, key US demands, or weakening EU regulation of US tech companies.
The European Commission said it would not comment ahead of the call between Greer and Šefčovič.
Trump’s post on Friday contrasted with his administration’s moves to defuse trade tensions with Beijing this month. The US has also recently sealed a trade deal with the UK.
But negotiations with other countries have since proceeded slowly, and Trump officials have signalled recently that they would be taking a tougher approach again, warning that countries that were not negotiating in “good faith” would again face maximum tariffs.
Additional reporting by Emily Herbert
