Trump threatens EU with 50% tariff from 1 June

The European Union will face 50% tariffs from 1 June, US President Donald Trump warned on Friday, in a move that threatened to tip the brewing transatlantic trade tensions into a full-scale trade war.  

“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 social media platform, Truth Social.

The bloc’s “powerful Trade Barriers, Vat Taxes, ridiculous Corporate Penalties, Non-Monetary Trade Barriers, Monetary Manipulations, unfair and unjustified lawsuits against Americans Companies, and more, have led to a Trade Deficit with the U.S. of more than $250,000,000 a year, a number which is totally unacceptable,” Trump added.

EU stocks plunged following the announcement, with the blue chip STOXX Europe 600 down 2.5%, the German DAX 2.7%, and the Paris-based CAC 2.8%. The euro also fell 0.5% against the dollar to $1.1302.

The EU currently runs a total trade surplus in goods and services of around €50 billion, according to the European Commission, which oversees EU trade policy.

EU exporters to the US currently face a 25% tariff on cars, steel and aluminium, as well as a 10% blanket levy.

Trump has also suspended so-called “reciprocal tariffs” until July, which could potentially add another 10% import tax on EU products.

The EU has repeatedly sought to avoid Trump’s tariffs by pledging to boost purchases of US energy and weapons. It has also sought to cooperate with Washington in strategically important sectors such as artificial intelligence, semiconductors, and critical minerals.

However, Brussels has staunchly rejected US calls to remove its VAT rate and weaken its agrifood and digital services laws. It has also threatened retaliatory tariffs on up to €116 billion worth of American exports if no trade agreement with the US is reached.

Around 70% of the bloc’s total exports to the US, equating to roughly €380 billion worth of goods, are currently subject to Trump’s levies, according to the European Commission.

“The strategy of the EU Commission and Germany in the trade conflict with Trump has failed miserably,” said Marcel Fratzscher, a macroeconomics professor at the Humboldt University in Berlin. “Europe will now receive no solidarity and is in the worst possible negotiating position.”

Trade Commissioner Maroš Šefčovič will speak to US Trade Representative Jamieson Greer later today.

The European Commission did not immediately respond to the announcement.

This is a developing story.

(vb)