• Mou Mou
• 23 May, 2025

·      Trump EU trade war 2025 market impact

·      Does he realize not everything can be produced in the U.S.?

·      Trump threatens 50% EU tariffs starting June 2025, impacting global trade

·      Trump’s threat of 50% EU tariffs in 2025 and a 25% iPhone tax has sparked trade war fears.

US President Donald Trump sent shockwaves through global markets on May 23rd, 2025 by announcing a whopping 50% tariff on all European Union (@EU) imports starting June 1st. He also threatened Apple with a 25% tax on iPhones not made in the US, escalating his trade war to new heights. This bold move aims to boost American manufacturing but has sparked fear of rising prices and trade tensions with markets tumbling and businesses bracing for impact.

Details & Context

Trump’s latest trade threats came via a fiery post on Truth Social where he slammed the EU for being “very difficult to deal with” and accused the bloc of exploiting the US with a massive trade deficit. According to US government figures, the US exported $370.2 billion to the EU last year while importing $605.8 billion, a gap Trump has long criticised, especially over car exports from Germany. He initially set a 20% tariff on EU goods in April but reduced it to 10% until July 8th for negotiations. However with talks stalling, Trump now recommends a 50% tariff starting June 1st, 2025 unless the goods are made in the US.

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The president also targeted Apple, demanding that iPhones sold in the US be manufactured domestically—not in India or elsewhere—or face a 25% tariff. Apple has been shifting production away from China with CEO Tim Cook announcing earlier in May 2025 that most iPhones for the US market will now be made in India, while Vietnam will produce iPads and Apple Watches. Trump’s demand for US-based production, however could disrupt Apple’s plans, as the US currently has no smartphone manufacturing infrastructure with over 60 million iPhones sold annually in the country.

This escalation follows Trump’s broader trade strategy since returning to the White House in 2025. He has imposed tariffs on various countries including a 25% levy on foreign-made cars since April, aiming to protect American jobs and reduce reliance on foreign goods. However, his approach has rattled global leaders, as higher tariffs could make it tougher for businesses to sell in the US, the world’s largest economy.

Quotes

·      Donald Trump (via Truth Social, May 23rd, 2025): “I have long ago informed Tim Cook of Apple that I expect their iPhones sold in the United States to be built in the United States, not India or anyplace else. If that is not the case, a Tariff of at least 25% must be paid by Apple to the US.”

·      Trump on EU (via Truth Social, May 23rd, 2025): “The European Union has been very difficult to deal with. Our discussions with them are going nowhere.! Therefore, I am recommending a straight 50% Tariff on the European Union, starting on June 1st, 2025.”

·      Hakan Samuelsson, Volvo CEO (via Reuters, May 23rd, 2025): “A 50% tariff would limit our ability to sell the EX30 electric vehicle in the US and customers will have to bear the cost increases.”

Additional Information

The EU Commission has not yet responded to Trump’s latest threat but is reportedly awaiting a call between EU trade chief Maros Sefcovic and his US counterpart. The EU had proposed cutting tariffs to zero in earlier talks but Trump insists on maintaining a 10% baseline on most imports, a sticking point in negotiations. On X, users expressed mixed reactions. Some criticised Trump’s aggressive stance with one post stating, “Trump just announced a 50% tariff on EU—does he realise not everything can be produced in the US.?” (@Liathetrader, May 23rd, 2025). Others saw it as a negotiation tactic, noting, “Trump’s done this before—big threats, then a rollback or pause” (@GambitCR, May 23rd, 2025).

Apple’s shares dropped 2.5% in premarket trading, and European stock markets took a hit—Germany’s DAX fell 1.9%, Italy’s FTSE MIB lost 2% and the UK’s FTSE 100 dropped 1.1% on May 23rd, 2025. Analyst Fawad Razaqzada from FOREX.com noted, “All the optimism over trade deals wiped out in seconds” highlighting the market’s sensitivity to Trump’s tariff announcements (@Reuters, May 23rd, 2025). The US-EU trade relationship is critical with the US exporting $350 billion and importing $550 billion annually, making the EU America’s second-largest trading partner after China (@NBC News, May 23rd, 2025).

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Impact Analysis

·      Rising Costs for Consumers: A 50% tariff on EU goods could spike prices for luxury items, pharmaceuticals and cars with Volvo’s CEO warning that customers will bear the brunt. iPhone prices may also rise if Apple cannot shift production to the US.

·      Market Turmoil: European and US stock markets plummeted with the S&P 500 futures down 1.3% and Apple shares falling, reflecting investor fears of a renewed trade war (@AP News, May 23rd, 2025).

·      Global Trade Tensions: The EU may retaliate with tariffs on US goods worth €95 billion including Boeing aircraft and Bourbon whiskey, if talks fail (@TheIrishTimes, May 23rd, 2025).

·      Apple’s Dilemma: With no US smartphone manufacturing, Apple faces a tough choice—absorb the 25% tariff or overhaul its supply chain, potentially delaying production (@Bloomberg, May 23rd, 2025).

·      Economic Ripple Effects: The trade war could disrupt global supply chains with southeast Asian countries like India and Vietnam caught in the crossfire as they navigate US-China tensions (@YahooFinance, May 23rd, 2025).

Conclusion

Trump’s threat of 50% tariffs on EU imports and a 25% tax on iPhones marks a dramatic escalation in his trade war, aimed at boosting US manufacturing but risking higher prices and global tensions. As markets reel and businesses brace for impact, the world watches to see if Trump’s hard line stance will force concessions or backfire with retaliatory measures. With June 1st, 2025, looming, this unfolding crisis underscores the high stakes of trade policy in an interconnected economy.

Call to Action (CTA)

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