President Trump’s second term in office will almost certainly be remembered for the septuagenarian’s globally detrimental fixation on import tariffs and trade deficits. After temporarily settling Chinese import tariffs at an incredible across the board 30%, Trump has his sights set on kicking a hornet’s nest by suggesting 50% import tariffs on all goods from the European Union. In a Truth Social post, the U.S. President wrote that he is “recommending a straight 50% tariff on the European Union, starting on June 1, 2025.” This came minutes after Trump threatened Apple with a targeted 25% tariff if it did not commit to making iPhones on U.S. soil.
The EU, which comprises 27 individual European nations, is America’s second largest trade partner after China. The U.S. exported over $370 billion worth of stuff to the EU in 2024, while importing over $605 billion. Much of the U.S. supply chain comes through Europe, including components on nearly every automobile sold here, including those built here. Stellantis, General Motors, and Ford all rely heavily on European suppliers, and each has its own manufacturing facilities in mainland Europe. Chicago Federal Reserve President Austan Goolsbee told NBC News that a 50% EU tariff would be “really scary” for the auto industry supply chain.
Calculating the cost
The EU “has been very difficult to deal with,” the President wrote on his personal echo chamber social media platform. “Our discussions with them are going nowhere!” The post is a predictable reversal of recent trade war de-escalation trends from the Trump administration.
For those keeping score, EU tariffs are just over one week away, and anything currently on a ship coming to a U.S. port will be significantly more expensive when it lands. Your BBS or OZ Racing wheels, your BMW’s new radiator, practically anything made by Bosch, it just got half as much again more expensive, and you’ll be stuck paying the bill. Hopefully this 50% “straight” tariff would supersede the recently enacted 25% tariff on all imported car parts and 10% across the board import tariff on any goods, though there is a potential to see the Trump Admin stack the three tariffs. There’s no way to know for sure yet, until more guidance is provided by the government. I’m beginning to think the chaos and uncertainty is the point.
The President’s reversal of his most severe tariffs had sparked a global economic market recovery in recent days, but today’s posts seem to have reignited the antagonistic trade wars. This, in turn, set stock indexes around the world on a downward trajectory once more, with the German and Italian markets trading down 3%, the Euro Stoxx 600 index fell more than 2%, and even the UK, which is not a member of the EU, saw its shares tumble. Here in the U.S. the Dow Jones Industrial Average slid over 500 points and S&P futures ticked 1.5% lower.
