Markets Tumble as Trump Targets EU With 50% Tariff Threat
Global financial markets nosedived Friday after former President Donald Trump proposed a dramatic 50% tariff on all goods imported from the European Union, prompting renewed fears of a transatlantic trade war and adding to investor anxiety over global uncertainty.
In a fiery post on his Truth Social platform, Trump accused the EU of long-standing “abusive” trade practices, citing high taxes, regulatory barriers, and what he called “unjustified lawsuits” against U.S. companies. He firmly shut the door on diplomacy, saying without hesitation:
“Our discussions with them are going nowhere. Therefore, I am recommending a straight 50% tariff on the European Union, starting June 1, 2025.”
Markets React Swiftly and Sharply
Trump’s announcement triggered a wave of panic selling across Europe’s major stock markets:
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Germany’s DAX fell 2.4%
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France’s CAC 40 dropped 2.2%
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STOXX 600 slid 1.7%
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London’s FTSE 100 declined 1.0%
Wall Street was not immune to the shock. The Dow Jones Industrial Average opened down 480 points, or 1.15%, as fears mounted that a full-blown trade conflict would hit U.S. exporters and disrupt global supply chains.
“This is not a drill. A 50% tariff would devastate sectors that depend on stable transatlantic trade — from auto parts to pharmaceuticals,” warned Emily Carter, a global markets analyst at Riverstone Capital.
A Fragile Truce Nears Its End
The proposed tariff dwarfs the 20% “reciprocal” tariff that was briefly in effect in April before Trump agreed to a temporary pause to allow further negotiations. That pause is scheduled to expire July 9. Since then, only the United Kingdom has secured a trade agreement with the U.S.
White House Trade Advisor Kelly Bessent confirmed that negotiations with the EU had “stalled,” while noting that discussions with India and several Asian nations were progressing.
“There are 18 important trading partners, and with the exception of the EU, most are negotiating in very good faith,” Bessent said during a briefing.
Europe Prepares to Hit Back
In Brussels, the reaction was terse but tense. The European Commission declined to comment immediately, citing an upcoming high-level discussion between Trade Commissioner Maroš Šefčovič and his U.S. counterpart.
However, EU diplomatic sources said retaliatory options are already being prepared, including:
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Up to 40% tariffs on U.S. agriculture
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Enhanced oversight of American tech companies
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Acceleration of the EU’s Carbon Border Adjustment Mechanism
“We will not be bullied into an unfair deal,” said a senior French trade official, speaking anonymously. “If Trump follows through, we will respond proportionally and decisively.”
Global Trade Order at Risk
Trump’s tariff threat has raised alarm beyond economics, with policy experts warning it could seriously damage the broader U.S.-EU relationship.
“This is more than a trade spat — it’s a potential rupture in the postwar transatlantic alliance,” said Dr. Elise Morgan, professor of international political economy at Johns Hopkins University. “The EU has been one of America’s closest allies. A move like this would cause lasting damage.”
Businesses are already scrambling to reassess supply chains, hedge against currency swings, and prepare for an uncertain regulatory landscape. Automakers, pharmaceutical firms, and manufacturers with cross-border operations are expected to be the hardest hit if tariffs go into effect.
“This is no longer about negotiation — it’s about survival,” said Johan Kruger, trade compliance head at Siemens Europe.
Outlook: Escalation Likely
With Trump’s June 1 deadline fast approaching and little sign of diplomatic progress, experts say the risk of escalation is high. The EU is expected to finalize its retaliation plans within the next 10 days, setting the stage for a potentially severe and sustained economic conflict.
If enforced, the 50% tariff would become the most aggressive trade action ever taken by the U.S. against its European allies — and could redefine global trade norms for a generation.
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