Markets fall as Trump recommends 50% tariff on EU, targets Apple

U.S. President Donald Trump cranked up his trade threats on Friday, targeting both smartphone giant Apple AAPL along with imports from the entire European Union, roiling global markets.

Trump threatened to impose a 25% tariff on Apple for any iPhones sold, but not manufactured, in the United States. He also said he would recommend a 50% tariff on the European Union to begin on June 1.

Stock markets in the U.S. and across Europe fell with the S&P 500 SPX down about 1% and the STOXX 600 index SXXP last down 1.3%.

COMMENTS:

ROBERT SOCKIN, SENIOR GLOBAL ECONOMIST, CITIGROUP, NEW YORK

"I really think that this 50% tariff is a negotiating threat by Trump to bring Europeans to the table. Europe has the second largest trade surplus with the U.S. after China, such a level of tariff would be relevant for pharmaceuticals, autos. I imagine this would be quite disruptive. At the previous tariff levels, we were predicting a 1 percentage point reduction in Europe's GDP growth. With a 50% tariff, there would be a recessionary forecast for Europe, but I am doubtful it would be enacted. The threat of tariffs on Apple also seems to be a threat to get more commitments of investment in the U.S."

NATHAN SHEETS, GLOBAL CHIEF ECONOMIST, CITIGROUP, NEW YORK

"It feels the 50% tariff is about negotiation, and Trump has been redefining the terms of the alliance with Europe, making it more transactional. My base case is that they are able to reach an agreement but I am most nervous about negotiations with European Union."

"On the threat of tariffs on Apple, it may create an additional political challenge to the Trump administration once they are enacted. As consumers see prices going up, they'll be upset and concerned about it. We're still recovering from the COVID-era inflation, and in many ways Trump was elected because voters were worried about inflation issues. The public response to that could be quite loud. Sales of iPhones in the U.S. are very high, across the income distribution. Many people see a smartphone as a necessity, and higher tariffs on electronics could have a political effect."

ON EU TARIFFS:

KALLUM PICKERING, CHIEF ECONOMIST, PEEL HUNT, LONDON

"The market is giving the signal that this policy move by the U.S. - judging by what we see in currencies - is probably amplifying problems that the U.S. economy has.

To a certain extent, we’ve seen this before. Donald Trump, when he’s not getting what he wants in negotiations, tends to escalate. The EU is a big economic entity with influence in trade negotiations and probably thinks it can stand its ground with America and will be prepared to tolerate some pain, as opposed to giving into requests from Trump that EU officials think are unreasonable."

HOLGER SCHMIEDING, CHIEF ECONOMIST, BERENBERG, LONDON

"This is a major escalation of trade tensions. With Trump you never know but this would be a major escalation. The EU would have to react and it is something that would really hurt the US and European economy. But Trump is highly volatile and I would not bet on this coming through."

GERRY FOWLER, HEAD OF EUROPEAN EQUITY STRATEGY, UBS, LONDON

"The 10% tariff that Europe is currently experiencing was always going to be a best case scenario considering that’s what the UK was able to achieve anyway. So tariffs were likely to go up, they could obviously in the worst case scenario not only be 20% but potentially higher, but also cause retaliation against some of the Mag 7.

So this is much worse but it is also a bit like the China tariffs -probably not a sustainable tariff.

"Even the fact that he’s used the phrase “I recommend” suggests this is part of the late stage negotiation tactics. But if they’re even close to being implemented, then obviously Europe’s retaliation would be very significant so quite problematic."

FIONA CINCOTTA, SENIOR MARKET ANALYST, CITY INDEX, LONDON

"The market was in this sense of perhaps there are going to be trade deals and worst case scenario is potentially being avoided after Liberation day and then there was that pause. But this latest threat is worse than the worst case scenario."

"We're seeing a big impact in equities in Germany particularly, because they're very much an export nation to the US, which will be impacted and so those companies are going to see profits hit, they're going to see revenue and margins hit. So we're seeing the this play out much more in the equities market than others."

JOHN CANAVAN, LEAD ANALYST, OXFORD ECONOMICS

"Treasury yields are lower ahead of the open this morning in response to a safe-haven bid over the past few minutes on additional tariff threats from President Trump. U.S. equity index futures spent most of the night narrowly mixed, but have declined on the latest development. The dollar index has been falling steadily throughout the night, with additional losses after the latest tariff threats."

ON APPLE TARIFFS:

MATTHEW TUTTLE, CHIEF EXECUTIVE OFFICER, TUTTLE CAPITAL MANAGEMENT, RIVERSIDE, CONNECTICUT

"The flip-side of Trump’s inner circle are the stocks that Trump has issues with. That will impact Apple, at least today. It should also impact any other tech names making products overseas."

DANIEL IVES, ANALYST, WEDBUSH SECURITIES, NEW YORK

"This would result in an iPhone price point that is a non-starter for Cupertino and translate into iPhone prices of ~$3,500 if it was made in the U.S. which is not realistic as this would take 5-10 years to shift production to the U.S. We believe the concept of Apple producing iPhones in the US is a fairy tale that is not feasible."