President Donald Trump’s threat to impose a sweeping 50% tariff on all European Union imports starting June 1 sparked a broad selloff across European markets Friday, triggering fears of a transatlantic trade war just as global growth faces renewed pressure.
In a post on Truth Social, Trump said the EU’s “powerful Trade Barriers, VAT Taxes, ridiculous Corporate Penalties, Non-Monetary Trade Barriers, Monetary Manipulations, unfair and unjustified lawsuits against American Companies” were to blame for an annual trade deficit exceeding $250 billion, which he called “totally unacceptable.”
The proposed tariff would exempt goods manufactured in the United States, potentially creating sharp distortions for EU-based exporters and global supply chains.
European Benchmarks Tumble
The fallout was immediate in markets. The Euro STOXX 50 index – as closely tracked by the iShares MSCI Eurozone ETF (NYSE:EZU) – dropped 3%, Italy’s FTSE MIB sank 2.9%, France’s CAC 40 lost 2.6% and Spain’s IBEX 35 fell 2.2%.
Germany’s DAX, as tracked by the iShares MSCI Germany Index Fund (NYSE: