US President Donald Trump has threatened a 50 per cent tax on all imports from the European Union as well a 25 per cent tariff on smartphones unless those products are made in America.
The threats reflect the reality that Trump's tariffs have yet to produce the trade deals he is seeking or the return of domestic manufacturing he has promised voters.
The Republican president said he wants to charge 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 per cent this month so Washington and Beijing could hold negotiations.
Trump was 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 per cent tax on most imports.
Trump threatens tariffs on Apple and other tech companies unless phones are made in the US. – AP
“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.”
Trump's broadside against the EU was prompted by the White House's belief that negotiations with the bloc are not progressing fast enough. But his sabre-rattling also marked a return to Washington's stop-and-start trade war that has shaken markets, businesses and consumers and raised fears of a global economic downturn.
The president's attack on Apple, meanwhile, is his latest attempt to pressure a specific company to move production to the United States, following automakers, pharmaceutical companies and chipmakers. However, the United States does not mass-produce smartphones – even as US consumers buy more than 60 million phones annually – and moving production would likely increase the cost of iPhones by hundreds of dollars.
Economics expert on what Trump's tariffs mean for the EU and US. – AP
Trump told reporters inside the Oval Office that his proposed tariff on Apple would also apply to "Samsung and anybody that makes that product," apparently referring to smartphones. He said he expected the new phone levy to be in place by the end of June.
Trump reiterated his complaint that the European Union treated the US badly and restricted the US from selling cars into the EU. "And I just said, 'It's time that we play the game the way I know how to play the game'."
"I’m not looking for a deal," Trump said when asked whether he expected a deal before June 1.
"We’ve set the deal – it’s at 50 per cent. But again, there’s no tariff if they build their plant here."
EU trade Chief Maros Sefcovic said the European Commission was fully committed to securing a deal that worked for both sides, following a phone call with his US counterpart Jamieson Greer and US Commerce Secretary Howard Lutnick. He added that EU-US trade "must be guided by mutual respect, not threats."
Speaking to reporters in The Hague, Dutch Prime Minister Dick Schoof backed the EU's strategy in trade talks and said the EU was likely to see this latest announcement as part of the negotiations.
"We have seen before that tariffs can go up and down in talks with the US," he said.
The White House paused most of the punishing tariffs Trump announced in early April against nearly every country in the world after investors furiously sold off US assets including government bonds and the US dollar.
He left in place a 10 per cent baseline tax on most imports, and later reduced his massive 145 per cent tax on Chinese goods to 30 per cent.
Germany backs EU to handle response to latest Trump tariff threats. – AP
"My base case is that they are able to reach an agreement, but I am most nervous about negotiations with European Union," said Nathan Sheets, global chief economist at Citigroup in New York.
A 50 per cent levy on EU imports could raise consumer prices on everything from German cars to Italian olive oil.
EU's total exports to the United States last year totaled about €500 billion (US$566 billion), led by Germany (€161 billion), Ireland (€72 billion) and Italy (€65 billion).
Pharmaceuticals, cars and auto parts, chemicals and aircraft were among the largest exports, according to EU data.
Disputes over tariffs
The White House has been in trade negotiations with numerous countries, but progress has been unsteady. Finance leaders from the Group of Seven industrialized democracies tried to downplay disputes over the tariffs earlier in the week at a forum in the Canadian Rocky Mountains.
"The EU is one of Trump's least favourite regions, and he does not seem to have good relations with its leaders, which increases the chance of a prolonged trade war between the two," said Kathleen Brooks, research director at XTB.
AP explains: Trump's latest tariff threats knock Wall Street and Apple lower. – AP
Bessent would not comment on other potential trade deals but said on Fox News that there would be more announced as the end of the 90-day pause on reciprocal tariffs approaches in July.
Shares in German carmakers and luxury companies, some of the most exposed to tariffs, fell.
Volvo Cars CEO Hakan Samuelsson told Reuters that customers would have to pay a large part of tariff-related cost increases, and that it could become impossible to import the company's smallest cars to the United States. He remained hopeful that a deal will soon be reached.
"It could not be in the interest of Europe or the US to shut down trade between them," Samuelsson said.
Apple declined to comment on Trump's threat, which would reverse exclusions he granted on smartphones and other electronics imported largely from China in a break for Big Tech firms that sell consumer goods. Shares fell 3 per cent after Trump said in an early Truth Social post that he told Apple CEO Tim Cook "long ago" that "I expect their iPhones that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else."
Cook and Trump met on Tuesday, according to a source familiar with the situation.
Polish trade minister believe "we will get a good deal" despite Trump 50 per cent tariff threat. – Reuters
Apple is speeding up plans to make most iPhones sold in the United States at factories in India by the end of 2026 to navigate potentially higher tariffs in China.
But the odds on moving production to the US are slimmer. In February, Apple said it will spend $500 billion over four years in nine American states, but that investment was not intended to bring iPhone manufacturing to the US.
"It is hard to imagine that Apple can be fully compliant with this request from the president in the next 3-5 years," D.A. Davidson & Co analyst Gil Luria said.