US president Donald Trump has warned of plans to impose a 50 per cent tariff on imports from the EU from next month, adding that talks with the bloc are “going nowhere” as he increases his threat to upend global trade.
The move threatening tariffs from June 1st escalates the trade war with the EU barely two weeks after the US agreed with China to slash tariffs in a pact that comforted global investors.
It also highlights the animosity that the Trump administration has shown towards Brussels since the US president’s return to the White House in January.
Taoiseach Micheál Martin has described the move as “enormously disappointing”. He had welcomed an earlier decision to pause tariffs until early July to allow for continued negotiations between the EU and the US.
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“Tariffs are damaging to all sides – those imposing them, those on the receiving end and, most importantly, to businesses and consumers," he said.
Mr Martin said a “negotiated outcome” is the best result for both sides and global trade. The EU has been engaging in good faith with the negotiation process, he added.
“Tariffs at the level suggested would not only push prices up, they would grievously damage one of the world’s most dynamic and significant trading relationships, as well as disrupting wider global trade,” Mr Martin said, adding: “We do not need to go down this road.”
Trade Commissioner Marius Šefčovič is due to talk to his US counterpart on Friday afternoon.
In a post on his Truth Social platform, Mr Trump attacked the EU bloc for “Trade Barriers, VAT Taxes, ridiculous Corporate Penalties, Non-Monetary Trade Barriers, Monetary Manipulations, [and] unfair and unjustified lawsuits against Americans Companies”.
He added: “Our discussions with them are going nowhere! Therefore I am recommending a straight 50% Tariff on the European Union, starting on June 1, 2025.”
Such a level would be more than double the tariff rate the US president announced for the EU on his self-styled “liberation day” on April 2nd.
Stock markets sank following Trump’s post, with the S&P 500 1.1 per cent lower in early trading on Wall Street. The Stoxx Europe 600 index fell 1.3 per cent.
Equity markets had recovered from the rout that followed “liberation day”, helped by moves such as Mr Trump’s climbdown on China, but were rocked by his latest trade salvo.
The president’s move “puts a dent in the view that markets will rein in Trump”, said Andrew Pease, chief investment strategist at Russell Investments. US trade representative Jamieson Greer is due to talk to EU trade commissioner Maroš Šefčovič later on Friday.
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The US imposed a 20 per cent “reciprocal” rate on most EU goods in April, but halved it until July 8th to allow time for talks. It has retained 25 per cent levels on steel, aluminium and car parts and is promising similar action on pharmaceuticals, semiconductors and other goods.
The bloc must now choose whether to retaliate with counter-tariffs or accede to US demands to make concessions.
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Member states have approved a €21 billion package of up to 50 per cent tariffs on items such as maize, wheat, motorcycles and clothing – measures that at present are not due to take effect until July 14th but could be quickly deployed.
The European Commission is still consulting on a bigger €95 billion list of possible measures, which includes Boeing aircraft, cars and bourbon whiskey.
As European markets were by hit by Trump’s latest threat, exporters and stocks linked to the health of the economy such as banks were particularly affected.
Carmaker Stellantis dropped 3.5 per cent while Deutsche Bank shed 5 per cent.
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Traders moved to price in faster interest rate cuts from the European Central Bank to support a tariff-hit economy.
The chance of a third quarter-point rate cut by the end of this year rose to more than 50 per cent compared with roughly 15 per cent earlier on Friday, according to levels implied by swaps markets.
“This is a reminder that the trade uncertainty is in no way over,” said Kasper Elmgreen, chief investment officer for fixed income and equities at Nordea Asset Management. “Every day that we don’t have a deal, we risk serious economic damage.”
US officials have been frustrated by the EU’s failure to offer the kind of concessions other countries have, with Howard Lutnick, US commerce secretary, saying on Thursday that Brussels was “impossible” to negotiate with.
Washington wants Brussels to reduce import barriers to diminish the size of the US’s trade deficit in goods with the bloc, which totalled $192 billion in 2024.
The Trump administration considers EU food and product standards protectionist and wants the bloc to unilaterally drop tariffs. The EU has proposed that both sides scrap tariffs on all industrial and some agricultural products.
Brussels has also offered to help tackle Chinese overcapacity in sectors such as steel and cars, and to discuss restrictions on exporting technology to Beijing.
But it has refused to discuss scrapping national digital taxes or VAT, key US demands, or weakening EU regulation of US tech companies.
The European Commission said it would not comment ahead of the call between Mr Greer and Mr Šefčovič.
Mr Trump’s post on Friday contrasted with his administration’s moves to defuse trade tensions with Beijing this month. The US has also recently sealed a trade deal with the UK.
But negotiations with other countries have since proceeded slowly, and Trump officials have signalled recently that they would be taking a tougher approach again, warning that countries that were not negotiating in “good faith” would again face maximum tariffs. – Additional reporting from the Financial Times Limited
