Trump Drops 50% Tariff Threat on EU, Sends European Markets Spinning
Trump’s back in tariff mode — and Europe’s markets felt it. After a 90-day pause, President Donald Trump announced last Friday that he’s “recommending a straight 50% tariff on the European Union” starting June 1, claiming the 27-nation bloc “has been very difficult to deal with.” The escalation sent European stock markets into a tailspin, with major indices falling ~2% as investors rushed toward safer assets.
- European automakers took the hardest hit, with the regional auto index plummeting 3.6%, led lower by BMW, Mercedes-Benz, and Stellantis.
- Treasury Secretary Scott Bessent defended the move on Fox News, stating, “EU proposals have not been of the same quality that we’ve seen from our other important trading partners,” while expressing hope that “this would light a fire under the EU.”
Stagflation concerns mount: Chicago Fed President Austan Goolsbee warned that the tariff’s intensity represents a concerning shift, noting, “To go to 10% was going to be the highest tariff rate that we had in the world in 90 years. To go to 50% is a completely different order of magnitude.” The steep duties could trigger what Goolsbee called a central bank’s “worst situation” — a stagflationary impact that simultaneously slows economic output while raising production costs and consumer prices. With the tariff deadline looming, European officials face mounting pressure to reach a compromise before the June 1 implementation date — or risk disrupting the pipeline that delivers $351B worth of American goods to the continent each year.