US financial markets experienced significant turmoil following Donald Trump’s threat of dramatic new tariffs against EU, and also, Apple. Trump rolled out an aggressive tariff plan, slapping a 50% duty on goods coming in from the European Union and specifically targeting Apple with a 25% levy on any of its products made outside the US.
He formulated the move as a strike against what he claims ‘long-standing trade inequalities’, and used it as a push to pressure Apple into bringing iPhone manufacturing back to American soil. Recently, during his state visit to Qatar, Trump revealed that he personally urged Apple CEO Tim Cook to stop expanding manufacturing operations in India, telling him that the US government does not support Apple building factories there, as India is already doing well on its own. In a post on his social media platform Truth Social, he reiterated that stand.
In response to the latest threats by the US President himself, the global market reaction was severe. In the US, the Dow Jones Industrial Average fell by over 400 points, the S&P 500 dropped 0.8%, and the Nasdaq declined 1.1%. Even Apple’s stock dropped 2.67%, closing at $195.98, shedding $5.38 in a single session and dragging broader indexes down with it. This actually reflects investor concerns about the potential impact of the tariffs on the company’s supply chain.
European markets were similarly affected. France’s CAC 40 index fell by 1.8%, Germany’s DAX dropped 2.3%, and Italy’s FTSE MIB declined by 2.73%. Also, investors sought safer assets amid the uncertainty, leading to a 1.6% increase in gold prices and a decline in Treasury yields (decreased to 4.05%, the lowest since October). Gold prices rocketed to an all-time high of $3,160 per ounce, now up 20% for the year. The SPDR Gold Shares ETF (GLD) jumped 2.1% to $309.58.
Currency markets also mirrored the uncertainty. The US dollar index dropped 0.46% to 99.45, hitting a six-month low against the Swiss franc. Both the Japanese yen and the franc surged over 3% against the dollar, and the euro climbed 0.5% to $1.1018, approaching a half-year high.
The EU expressed strong opposition to the proposed tariffs, with European Commission President Ursula von der Leyen describing them as a ‘major blow to the world economy’. She indicated that the EU was preparing countermeasures to protect its interests.
However, Trump’s justification for the aggressive measures was based on longstanding grievances about US-EU trade dynamics. He accused the bloc of being ‘formed to take advantage of the US on trade’, described it as ‘very difficult to deal with’, warning that tariffs would take effect from June 1. Analysts warned that the tariffs could disrupt global supply chains, increase consumer prices, and potentially lead to a recession. JP Morgan raised its estimate of the likelihood of a global recession by year-end from 40% to 60%.
