US President Donald Trump has threatened a 50-percent tariff on all imports from the European Union and 25-percent on Apple products unless iPhones are made in the United States.
The president announced his intentions over social media on Friday.
“Our discussions with them are going nowhere!” Trump posted on Truth Social. “Therefore, I am recommending a straight 50% Tariff on the European Union, starting on June 1, 2025. There is no Tariff if the product is built or manufactured in the United States.”
The Republican president’s proposal would see higher import taxes on goods from the EU, a longstanding US ally, than from China, a geopolitical rival that had its tariffs cut to 30 percent this month so Washington and Beijing could hold negotiations.
Trump has been upset by the lack of progress in trade talks with the EU, which has proposed mutually cutting tariffs to zero even as the president has publicly insisted on preserving a baseline 10-percent tax on most imports.
Trump aides have said the goal of his tariffs was to isolate China and strike new agreements with allies, but the president’s tariff threats undermine the logic of those claims. Not only could the EU face higher tariffs than China, but the bloc of member states might have been better off by establishing a broad front with China and other countries against Trump’s trade policy, said German economist Marcel Fratscher.
“The strategy of the EU Commission and Germany in the trade conflict with Trump is a total failure,” Fratscher, the head of the German Institute for Economic Research, said on X. “This was a failure you could see coming — Trump sees Europe’s wavering, hesitation and concessions as the weaknesses that they are.”
Apple’s ultimatum
Trump’s post had been preceded by a threat of import taxes against Apple for its plans to continue making its iPhone in Asia. Apple now joins Amazon, Walmart and other major US companies in the White House’s crosshairs as they try to respond to the uncertainty and inflationary pressures unleashed by his tariffs.
“I have long ago informed Tim Cook of Apple that I expect their iPhone’s that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else,” Trump wrote on Truth Social. “If that is not the case, a Tariff of at least 25% must be paid by Apple to the US.”
The statement by Trump is critical in that he suggests the company itself would bear the price of tariffs, contradicting his earlier claims as he rolled out a series of aggressive tariffs over the past several months that foreign countries would shoulder the cost of the import taxes. In general, importers pay the tariffs and the costs are often passed along to consumers in the form of higher prices.
In response to Trump’s tariffs on China, Apple CEO Tim Cook said earlier this month that most iPhones sold in the US during the current fiscal quarter would come from India, with iPads and other devices being imported from Vietnam. After Trump rolled out tariffs in April, analysts estimated that the cost for a $1,200 iPhone, if made in America, could jump anywhere from $1,500 to $3,500.
“The pressure from Trump administration on Apple to build iPhone production in the US … would result in an iPhone price point that is a non-starter for Cupertino and translate into iPhone prices of ~$3,500 which is not realistic as this would take 5-10 years to shift production to the US. We believe the concept of Apple producing iPhones in the US is a fairy tale that is not feasible,” Wedbush Securities analyst Dan Ives said in a note.
Trump had previously created an exemption on electronics imported from China to help companies such as Apple, something he could now remove. He also threatened separate 25-percent import taxes on computer chips and could have the tariffs schedule rewritten in ways that could expose Apple products to the taxes.
Until recently, the US president repeatedly bragged about the $500bn that Apple in February pledged to invest domestically as part of its development of artificial intelligence technologies. But he publicly turned against the company last week while speaking in Qatar.
“I had a little problem with Tim Cook yesterday,” Trump told the audience. “I said to him, ‘My friend, I treated you very good. You’re coming here with $500bn, but now I hear you’re building all over India. I don’t want you building in India.’”
A global response
German Foreign Minister Johann Wadephul said the EU’s executive commission has his country’s full support in working to “preserve our access to the American market”.
“I think such tariffs help no one, but would just lead to economic development in both markets suffering,” Wadephul said in Berlin. “So we are still counting on negotiations, and support the European Commission in defending Europe and the European market while at the same time working on persuasion in America.”
Dutch Prime Minister Dick Schoof said he expected a calm and robust response from the EU to the announcement of possible new US trade tariffs.
In response to the news, Volvo Cars CEO Hakan Samuelsson said the tariffs would result in higher prices for consumers. In an interview with the Reuters news agency, he said the tariff would limit the ability of Volvo Cars to sell its Belgium-made EX30 electric vehicle in the US.
Investors are shaken on the move. As of 10:30am in New York (14:30 GMT), the Dow was down 0.6 percent, the tech-heavy Nasdaq was down 1 percent and the S&P 500 was down 0.8 percent. Apple is down 2.3 percent from the market close yesterday.
SAP, Europe’s most valuable company’s stock, is down 1.8 percent from yesterday’s close. Novo Nordisk, the Danish pharmaceutical giant and the maker of the blockbuster drug Ozempic, which is Europe’s second-highest valued company, has seen its stock down 1 percent on the news.
Shares in LVMH and Hermes, France’s largest listed companies by market capitalisation, fell by about 3 and 4 percent, respectively.
