President Donald Trump abruptly reignited his global trade wars on Friday, announcing he would impose a steep 50% tariff on all European Union imports beginning June 1, a dramatic move that sent shockwaves through financial markets and threatens to disrupt the world's largest trading relationship.
"The European Union, which was formed for the primary purpose of taking advantage of the United States on TRADE, has been very difficult to deal with," Trump wrote on his Truth Social platform. "Our discussions with them are going nowhere!"
The announcement marked a sharp reversal from the cautious optimism that had emerged in recent weeks after Trump had negotiated preliminary agreements with China and the United Kingdom, temporarily calming fears of an all-out global trade war that had rattled investors since his inauguration.
European officials were blindsided by Trump's announcement, which came with just nine days' notice. The EU is the United States' largest trading partner, with bilateral trade in goods and services totaling nearly $1.3 trillion annually. In 2022 alone, the EU purchased $351 billion in American exports, making it the second-largest market for U.S. goods.
"I'm not looking for a deal," Trump later told reporters at a White House signing event when asked if he expected to negotiate with European leaders before the June 1 deadline. "I mean, we've set the deal. It's at 50%."
U.S. Treasury Secretary Scott Bessent attempted to frame the announcement as a negotiating tactic, telling Fox News that the tariff threat would "light a fire under the EU" after what the administration views as insufficient progress in trade talks. "The president believes that the EU proposals have not been of the same quality that we've seen from our other important trading partners," Bessent said.
But European officials, who declined official comment, privately expressed frustration at what they see as an arbitrary and disproportionate measure. The EU had already been grappling with Trump's earlier moves – a blanket 10% tariff announced in April, plus sector-specific duties of 25% on steel and aluminum imports.
The European Commission has previously indicated it stands ready to retaliate with its own tariffs on American goods, as it did during Trump's first term when it imposed duties on approximately $6 billion worth of U.S. products including whiskey, motorcycles, and denim in response to similar steel and aluminum tariffs.
The latest escalation comes after Trump had also threatened a separate 200% tariff on European alcohol imports in March, specifically targeting wines, champagnes and other spirits in response to EU duties on American whiskey. That threat particularly alarmed the beverage industry on both sides of the Atlantic, with the Distilled Spirits Council of the United States urging a return to the "zero-for-zero" tariff arrangement that had benefited the sector since 1997.
Economists warned that the proposed 50% tariff would have significant inflationary effects in the U.S., raising prices on a wide range of European imports from automobiles and machinery to food, chemicals, and pharmaceuticals. Chicago Fed President Austan Goolsbee described the potential impact as "stagflationary," both slowing economic output and raising consumer prices simultaneously.
"To go to 10% was going to be the highest tariff rate that we had on the world in 90 years. To go to 50% is a completely different order of magnitude," Goolsbee told CNBC.
The announcement came shortly after Trump had also threatened a 25% tariff on Apple if the company doesn't begin manufacturing iPhones in the United States instead of countries like India, further unsettling markets and raising questions about the administration's broader economic strategy amid growing global tensions.
