On May 23, 2025, former U.S. President Donald Trump shocked global markets with a bold new trade proposal: a tariff of up to 50% on goods imported from the European Union, potentially set to take effect as early as June 1. Trump also threatened Apple with a 25% tariff if it doesn’t relocate iPhone production back to the U.S. The news rattled investors, raising fears of a renewed trade war that could disrupt global economic stability.
European stock markets responded swiftly. The STOXX 600 dropped nearly 2% intraday, while Germany’s DAX plunged over 3%, with automakers hit hardest. U.S. index futures slumped—Dow futures fell more than 600 points, and Nasdaq 100 futures lost almost 2%. Apple shares tumbled nearly 4% in premarket trading, as doubts mounted over the feasibility of reshoring its production lines.
The turbulence was felt beyond equities. In currency markets, the euro briefly climbed above 1.13 before paring gains, while the dollar weakened. The yen, a traditional safe haven, gained ground, with USD/JPY touching a two-week low at 142.77. Oil prices slid too—Brent crude fell below $64 per barrel, as rising trade tensions threatened to curb global fuel demand.
Analysts voiced growing concern. Berenberg’s chief economist warned that the policies marked a dangerous escalation in trade hostilities, likely to hurt both EU exports and U.S. manufacturers. UBS noted that while the tariffs might be intended to gain leverage, they risk inflicting longer-term economic damage.
Meanwhile, Apple finds itself in a political crossfire. Trump’s push to bring iPhone production back stateside raises both logistical and cost-related challenges; analysts estimate a full relocation could take years and drive iPhone prices above $3,000. Apple has been gradually shifting some production to India—moves that have drawn criticism from Trump for “leaving America.”
Europe wasted no time in responding. EU Commission officials stated they would not back down and are preparing retaliatory tariffs on $28 billion worth of U.S. goods, targeting both consumer and luxury products. They also plan to launch a WTO complaint.
None of this comes out of nowhere. Since returning to office, Trump has sent strong signals toward protectionist trade policies. Earlier in 2025, the U.S. imposed 25% tariffs on EU automobile, steel, and aluminum imports. In April, a proposed 20% “trade balance tax” was postponed until July. Now, with the introduction of new tariffs, markets are increasingly unsettled by the rising barriers.
Yields on German 2-year bonds dropped as investors sought safe havens, highlighting unease over policy uncertainty. Some economists warn that an extended U.S.-EU trade conflict could drag the global economy into a phase of stagflation—a toxic mix of slow growth and high inflation.
Political timing is also under scrutiny. With the U.S. midterm elections approaching, Trump’s aggressive trade stance may be aimed at energizing his base around themes of manufacturing and economic nationalism. Yet analysts caution that weaponizing tariffs could backfire—undermining business confidence and fracturing transatlantic relations.
With a few weeks left before the June deadline, markets will be watching closely for signs of a negotiated resolution. But with growing mistrust and hardening rhetoric on both sides, this may just be the beginning of a prolonged trade showdown.
