European stock markets tumbled Friday after US President Donald Trump ended a lull in his trade war as he raised the spectre of hitting imports from the European Union with a massive 50 per cent tariff.
The Paris CAC 40 index and Frankfurt DAX fell by around three per cent at one point, with shares in luxury and car companies taking a hit, before paring back some losses.
London’s FTSE 100, which had been up earlier, fell into the red. The DAX was also higher earlier in the day as German economic growth data was revised up.
US stock futures — contracts that indicate how markets will open — were also in negative territory.
Trump’s new threats revived investor concerns about his trade policies after a recent deal with Britain and a tariffs truce with China.
“All the optimism over trade deals wiped out in minutes — seconds, even,” said Fawad Razaqzada, market analyst at StoneX.
Trump really wants to nuke markets into the weekend doesn’t he pic.twitter.com/5rLzHQ5dpu
— jbulltard (@jbulltard1) May 23, 2025
Trump said on his Truth Social platform that he was “recommending a straight 50 per cent Tariff on the European Union” from June 1, as “discussions with them are going nowhere!”
The US president had announced 20 per cent tariffs on EU goods last month but suspended the measure to give space for negotiations.
Trump, however, maintained a 10 per cent levy on imports from the 27-nation bloc and nearly every other nation around the world, along with 25 per cent duties on the car, steel and aluminium industries.
He also threatened on Friday to hit Apple with a 25 per cent tariff if its iPhones are not manufactured in the United States.
His social media outburst rocked stock markets which had steadied following losses over concerns about the ballooning US debt and rising US borrowing costs.
Investors were already on edge after Moody’s stripped the United States of its top-tier credit rating and the House of Representative approved Trump’s tax cut plan, which critics say would add to the country’s debt pile.
The yield — or borrowing costs — on 10-year and 30-year US government bonds surged this week as investors worry about the fiscal health of the world’s biggest economy.
The yields eased late Thursday.
Trump’s tax package, which now goes to the Senate, had faced scepticism from fiscal hawks who fear the country is headed for bankruptcy.
Independent analysts warn it would increase the deficit by as much as $4 trillion over a decade.
But the White House insists it will spur growth of up to 5.2 per cent, ensuring it adds nothing to the $36 trillion national debt — growth projections that are well outside the mainstream consensus.
Oil prices also reversed course to fall by around one per cent following Trump’s new tariff threats.
