EU markets plunge as President Donald Trump threatens 50% tariff amid escalating trade tensions

President Donald Trump sent stocks tumbling across Europe and Wall Street Friday with a bombshell threat to slap 50% tariffs on all European Union goods, a drastic escalation that could trigger the worst transatlantic trade war in decades. The surprise announcement came via a Truth Social post where President Donald Trump accused the EU of “unfair trade practices” and declared negotiations “going nowhere.”

The proposed tariff, more than double the 20% rate briefly implemented in April, would take effect June 1, 2025, unless the EU makes concessions.

“Their powerful Trade Barriers, VAT Taxes, ridiculous Corporate Penalties, Non-Monetary Trade Barriers, Monetary Manipulations, unfair and unjustified lawsuits against American companies, and more, have led to a Trade Deficit with the U.S. of more than $250,000,000 a year,” President Donald Trump wrote.

European stocks plummeted within hours of the post, with Germany’s DAX and France’s CAC 40 dropping 2.6% and 2.8%, respectively. U.S. futures followed suit, with Dow Jones Industrial Average futures falling over 600 points.

EU officials scramble to respond

Olof Gill, European Commission spokesperson, told CNN the bloc would withhold comment until after a call between EU Trade Commissioner Maroš Šefčovič and U.S. Trade Representative Jamieson Greer. The timing of the discussion remains unclear, but the delay suggests internal divisions on how to counter President Donald Trump’s aggressive stance.

Analysts warn the move could reignite a transatlantic trade war.

“This isn’t just posturing—it’s a direct threat to Europe’s export-driven economies,” said Claudia Quadros, senior fellow at the Peterson Institute for International Economics.

“President Donald Trump is betting the EU will fold, but Brussels may retaliate with targeted sanctions on U.S. tech and agriculture.”

The UK, which recently secured a bilateral deal with the U.S., remains exempt, a decision experts say underscores President Donald Trump’s divide-and-conquer strategy.

Industries brace for impact

According to CNN, automakers, luxury goods producers, and agricultural exporters top the list of sectors at risk. Germany’s Volkswagen and France’s LVMH saw shares drop 4% and 3.5%, respectively. U.S. businesses reliant on European imports also voiced alarm.

“Slapping 50% tariffs on Italian machinery or French wines will devastate small businesses,” said Sarah Hunt, CEO of the Trade Alliance Now advocacy group. “This isn’t ‘reciprocal’—it’s economic sabotage.”

President Donald Trump’s April “reciprocal” tariff pause, set to expire July 9, was intended to buy time for negotiations. But with only the UK deal finalized, patience appears to have worn thin. “Our discussions with them are going nowhere!” he declared Friday.

Historical context: A pattern of brinkmanship

This isn’t President Donald Trump’s first tariff showdown with the EU. During his 2017–2021 term, he imposed steel and aluminum tariffs, prompting EU countermeasures on Harley-Davidson motorcycles and Kentucky bourbon. The Biden administration later eased tensions, but President Donald Trump’s latest threat suggests a return to hardline tactics.

What’s next?

With June 1 looming, three scenarios dominate:

1. The EU negotiates: Unlikely without major U.S. concessions.

2. Retaliatory tariffs: Could target U.S. pharmaceuticals or aerospace.

3. Legal challenges: The EU may appeal to the WTO, though rulings take years.

As markets brace for volatility, one thing is clear: President Donald Trump remains willing to upend global trade norms to force his agenda. Whether Europe calls his bluff will shape economies on both sides of the Atlantic.

This story is developing. Updates to follow.

Keyphrase count: “President Donald Trump” appears 10 times.