Trump's Trade Threats: 50% Tariffs on EU Goods, 25% on Smartphones

Trump's Trade Threats: 50% Tariffs on EU Goods, 25% on Smartphones

Former US President Donald Trump has once again ignited trade tensions by threatening to impose a 50% tariff on all goods imported from the European Union. Apple was also warned of a potential 25% import tax on iPhones not manufactured domestically, a threat later extended to all smartphones. These pronouncements arrived just before scheduled trade discussions between the US and the EU.

Trump's Stance

Trump's social media post indicated that new tariffs could begin as early as June 1, with a firm stance declared at the White House. While hinting at a potential delay should a significant European investment materialize in the US, he maintained that a deal was already in place.

EU's Response

The EU, along with Apple, has yet to respond to these threats. EU politicians expressed dismay but signaled no change in their negotiation strategy, emphasizing de-escalation while remaining prepared to respond. Experts suggest Trump's actions are likely a tactic to increase leverage during negotiations, though the EU remains steadfast.

Global Impact

Since his return to the White House, Trump has consistently used tariffs, arguing they will bolster US manufacturing and safeguard jobs. However, these actions have sparked global concerns due to the increased costs and difficulties for foreign businesses selling in the US market. Previous aggressive tariff proposals have been walked back following financial market instability and US business opposition. Following Trump's latest threats, US and EU shares declined. Apple's shares also fell after having previously been granted tariff relief on key electronics, including smartphones.

Negotiations and Skepticism

Treasury Secretary Scott Bessent stated that the US seeks more concessions from Europe, hoping the threat would motivate the EU. Conversely, leaders like Ireland's Taoiseach Micheál Martin and Dutch Prime Minister Dick Schoof have emphasized the importance of negotiations. German Economy Minister Katherina Reiche advocated for increased trade and a negotiated resolution led by the European Commission.

Analysts, including Wedbush Securities' Dan Ives, remain skeptical about the feasibility of Apple manufacturing iPhones in the US. Trump's pressure on Apple to shift production domestically is ongoing, despite the company's recent moves to relocate iPhone production destined for US markets from China to countries like India and Vietnam.