The European Union’s reprieve from the worst of U.S. President Donald Trump’s trade war might have been short lived.
Trump recommended “a straight 50 percent tariff on the European Union, starting on June 1” in a post on social media Friday, saying that transatlantic trade talks “are going nowhere.”
While imports from the EU were hit with 20 percent tariffs when Trump rolled out his reordering of global trade on “Liberation Day,” April 2, that was cut to 10 percent pending negotiations.
Washington’s hardball, yet start-and-stop, approach to trade did open up talks with countries around the world but few deals have been struck. The exception is the U.K., which is no longer part of the EU.
The tariff threat on Friday pressured shares of luxury houses that produce many of their goods in the EU and are looking for the U.S. consumer to offset weakness in China.
Among the decliners were Hermès International, down 4 percent to 2,340 euros; Brunello Cucinelli, 3.6 percent to 103.90 euros; Compagnie Financière Richemont, 2.7 percent to $155.95; LVMH Moët Hennessy Louis Vuitton, 2.5 percent to 472.85 euros; Salvatore Ferragamo, 2.5 percent to 5.56 euros; Moncler, 2.4 percent to 53.50 euros, and Kering, 2.3 percent to 171.50 euros.
U.S. markets were also rattled with the Dow Jones Industrial Average down 0.7 percent, or 333.21 points, to 41,469.10 in early trading ahead of the long Memorial Day weekend.
Trump reiterated that the EU was formed for “the primary purpose of taking advantage of the United States on trade” and said the bloc has been “very difficult to deal with.”
“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, a number which is totally unacceptable,” he said.
That figure understates the goods deficit with the EU, which the U.S. Trade Representative’s office pegged at “$235.6 billion in 2024, a 12.9 percent increase ($26.9 billion) over 2023.”
While Trump recommended a 50 percent tariff on EU goods, these numbers have a way of moving lower.
China, after some tit-for-tat tariff boosts, saw tariffs on its goods shoot up to 245 percent this spring — a level that was in effect an economic embargo. But those tariffs fell to 30 percent for 90 days to facilitate negotiations.
