Trump Slaps EU with 50% Tariff Threat as Trade Negotiations Collapse

Trade tensions escalate as the former president targets European imports with a punitive half-cost penalty—effective June 1.

Wall Street shrugs—another day, another arbitrary trade war to hedge against.

Trump lists grievances as trade officials prepare for face-off

In his posts, Trump accused the European Union of building its foundation on exploiting US trade. He claimed the bloc uses tactics such as “Trade Barriers, VAT Taxes, ridiculous Corporate Penalties, Non-Monetary Trade Barriers, Monetary Manipulations,” and lawsuits against American firms, which he said contribute to a $250 billion trade deficit that he called “totally unacceptable.”

Trump reiterated, “There is no Tariff if the product is built or manufactured in the United States.” The announcement also created pressure on US Trade Representative Jamieson Greer, who is scheduled to meet European Trade Commissioner Maros Sefcovic later Friday.

According to the Financial Times, Greer plans to tell Sefcovic that Brussels’ recent proposals still fail to meet American standards. The EU’s main executive body, the European Commission, declined to comment on the latest developments.

Trump’s new tariff recommendation follows an earlier 20% tariff announcement on April 2nd, which he called part of his “reciprocal” policy approach. But Friday’s 50% figure marked a new level, one that some analysts say could destabilize trade if it becomes law.

Speaking to CNBC’s Squawk Box, Chicago Fed President Austan Goolsbee said, “To go to 10% was going to be the highest tariff rate that we had on the world in 90 years. To go to 50% is a completely different order of magnitude.”

Goolsbee warned that such a decision WOULD likely trigger a stagflationary effect — lowering economic output while raising prices. “That’s the Central Bank’s worst situation,” he said.

Bond yields drop and Bitcoin slips after tariff threat

As traders rushed to dump risk and MOVE into government debt, bond markets across Europe reacted sharply. The German 10-year bund, widely considered the eurozone’s benchmark for stability, fell 8 basis points to 2.56%.

French and Italian bonds also dropped, losing 5 basis points each. Swiss 10-year bonds declined by 12 basis points, reflecting investors seeking SAFE ground.

Commodities and crypto markets didn’t escape either. Bitcoin, which had recently broken above $111,000, pulled back to $108,500. At the same time, gold prices exploded by over 50%, hitting a high of $3,351.15. The US dollar, already under pressure from domestic inflation concerns, slipped 1%, landing at 99.37 by mid-afternoon.

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