Trump's new tariff threats show trade uncertainty here to stay

Synopsis

Investors hoped for trade war calm, but Donald Trump dashed those hopes. He threatened high tariffs on the European Union and smartphones. Equities dropped globally, and the dollar weakened. Business leaders now face ongoing uncertainty. Trump declared he is not seeking a deal with the EU. Treasury Secretary Scott Bessent mentioned potential deals with other nations like India.

New York: Investors were growing optimistic that Donald Trump's trade wars had started to calm down. His latest tariff broadsides quickly disabused them of that notion.

Initial agreements with the UK and China buoyed hopes on Wall Street and in corporate boardrooms that the US president was starting to peel back the highest US tariffs in nearly a century.

But Friday delivered a harsh reminder of Trump's volatile policymaking and penchant for brinkmanship, when he threatened a 50% tariff on the European Union and a 25% levy on smart phones if companies including Apple Inc. and Samsung Electronics Co. failed to move production to the US.

Equities dropped across the globe, the dollar slumped to its lowest level since 2023 and business leaders were left to grapple with the notion that Trump-generated uncertainty is here to stay.

"Today's news that Trump is threatening enormous tariffs on the EU and is singling out Apple as a firm are examples of what we we should expect for the next two months if not for the rest of the year," said Marcus Noland, executive vice president of the Peterson Institute for International Economics. "Peace has not broken out."

Trump made that clear when from the Oval Office Friday afternoon, he dug in, declaring he is "not looking for a deal" with the EU.

"I just said it's time that we play the game the way I know how to play the game," he told reporters.

His ire was notable given that he notched a major economic win this week, with the House passing his massive tax and spending legislation after Trump led a furious, last-minute lobbying effort that won over enough Republican hold-outs.

A White House official said this week that the president was hoping to ink more trade agreements with some major economies and then fast-track deals with others during a 90-day pause on his tariffs announced April 2. Some arrangements are said to be close, including one with India, Treasury Secretary Scott Bessent told Fox News on Friday.

Business leaders and consumers will be watching carefully for next steps. The president's Friday directive on the EU offered a preview of what he said his administration might do with dozens of trading partners seeking lower duties: simply dictate tariff levels.

As he did last month after Trump's initial tariff announcement shook markets, Bessent sought to project a sense of order onto the president's pronouncements.

Bessent said in the same interview that many deals are nearing conclusion and labeled the EU as an "exception." That echoed comments from Commerce Secretary Howard Lutnick, who said at an Axios event earlier this week that the EU has been "very difficult."

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