Trump sends markets plunging with 50% tariff threat on EU

(Sharecast News) - Stockmarkets slumped on Friday after US President Donald Trump said he wanted a 50% tariff on the European Union from June 1and complained that the 27-nation bloc had been "very difficult" to deal with. The pan-regional Stoxx 600 index was down more than 2% to 538, erasing morning gains. Britain's FTSE and Germany's DAX fell 1.2% and 2.5% respectively, while France's CAC-40 was down almost 3%.

In a typically bombastic social media post, Trump said: "Our discussions with them (the EU) are going nowhere!"

His announcement came shortly after he threatened to impose a tariff of at least 25% on tech giant Apple if the company did not start making iPhones in the US. Wall Street futures immediately nosedived on the news.

EU officials declined to comment. Trump's move comes in the middle of a 90-day pause in his global trade war which he started last month by slapping what he called "reciprocal" tariffs on all trading tariffs.

"Is the President using tariffs as another negotiating tactic, to force the EU to cede to his demands? Or is this a sign that negotiations since mid-April have failed, and we should expect tit for tat threats from the EU later today? We expect it is a mixture of both," said XTB research director Kathleen Brooks.

"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."

"This lurch to the downside has pushed European indices into a losing streak for this week, and European indices are currently underperforming US stocks. The FTSE 100 is the outperformer so far on Friday, it is down by 1%, as the UK/ US trade agreement acts as a protection against US trade aggression."

"EU companies are not the only ones that are selling off. Talk of tariffs have weighed on sentiment more broadly, with US stock index futures pointing to a large decline at the open later today. Apple's share price is down more than 3%... the knee jerk reaction lower is to be expected, especially since Apple is unlikely to produce iPhones locally in the US."

Reporting by Frank Prenesti for Sharecast.com