Trump threatens new tariffs on European Union and Apple, reigniting trade fears

BRUSSELS - The European Commission urged the US on May 23 to bring respect, not threats, to trade talks after US President Donald Trump

pushed for a 50 per cent tariff on EU goods

.

Mr Trump had threatened on May 23 to ratchet up his trade war again, pushing for the tariff on EU goods starting on June 1 and warning Apple he may slap a 25 per cent levy on all imported iPhones bought by US consumers.

The twin threats, delivered via social media, roiled global markets after weeks of de-escalation had provided some reprieve in the tariff battle.

Major US stock indexes and European shares fell and the dollar weakened, while the price of gold, a safe haven for investors, rose. US Treasury yields fell on fears about the tariffs’ effect on economic growth.

Mr Trump’s broadside against the EU was prompted by the White House’s belief that negotiations with the bloc are not progressing fast enough. 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.

And the President’s attack on Apple is his latest attempt to pressure a specific company to move production to the US, following automakers, pharmaceutical companies and chipmakers.

The US, however, 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.

Later on May 23, Mr 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.

Mr 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,” Mr 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, the EU’s executive arm, was fully committed to securing a deal that worked for both sides, following a May 23 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 Mr 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.

Mr Trump 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. A 50 per cent levy on EU imports could raise consumer prices on everything from German cars to Italian olive oil.

The EU’s total exports to the US in 2024 totalled about €500 billion (S$732 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 (G-7) industrialised 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 XTB research director Kathleen Brooks.

Talks with Japan appeared less fraught.

After meeting separately with Mr Lutnick and Mr Greer on May 23, Japan’s top trade negotiator, Mr Ryosei Akazawa, said the two sides discussed expanding trade, non-tariff barriers and economic security issues. He described their talks as franker and more in-depth than before.

Speaking to reporters, Mr Akazawa said that while it would be great if an agreement could be reached when Mr Trump and Japanese Prime Minister Shigeru Ishiba meet at the G-7 summit in Canada in June, he would not rush just to secure a deal.

“Our country has national interests that must be protected, so it is not sufficient simply to forge an agreement quickly,” Mr Akazawa said. “As a negotiator, I can tell you that in negotiations the party stuck to a deadline usually loses.”

US Treasury Secretary Scott 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.

Apple declined to comment on Mr 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.

Apple shares fell 3 per cent after Mr Trump said in an early Truth Social post that he told company chief executive 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”.

Mr Cook and Mr Trump met on May 20, according to a source familiar with the situation.

Apple is speeding up plans to make most iPhones sold in the US 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 would spend US$500 billion (S$642 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 three to five years,” D.A. Davidson & Co analyst Gil Luria said. REUTERS