Market Wire: Selloff Resumes As Trump Issues New Tariff Threats

US financial markets are plunging, the euro is tumbling, and the dollar is retreating after President Donald Trump announced a new round of tariffs on Apple and the European Union.

In a post on his social media platform, the president said “I have long ago informed Tim Cook of Apple that I expect their iPhone’s that will be sold in the United States of America will be manufactured and built in the United States, not India, or anyplace else. If that is not the case, a Tariff of at least 25% must be paid by Apple”. He then shifted his sights across the Atlantic in a second post, saying “Our discussions with them are going nowhere! Therefore, I am recommending a straight 50% Tariff on the European Union, starting on June 1, 2025”.

Shares in Apple – the world’s third-largest publicly traded company – are down roughly 3 percent in pre-market trading, and major equity indices are set to fall at the open. The euro is down almost 65 points from its peak earlier in the session, but remains higher against the dollar on an overnight basis.

The greenback is almost half a percentage point softer as investors again downgrade US growth expectations on a substantial rise in average tariff rates, and volatility expectations — which had been declining on signs of a more moderate approach from the administration in recent weeks — are now ratcheting higher. The yen and Swiss franc are climbing as investors again seek safety in countries with positive net international investment positions.

We doubt today’s tariffs will remain intact for long, and suspect that markets will retrace their steps to some degree in the hours ahead as many investors put their TACO* trades back on. But the president’s actions could prevent volatility expectations from following their typical seasonal declines, and might set the stage for a hot, turbulent summer in currency markets.

*Trump Always Chickens Out

**We’ll pause distribution of the morning Market Brief for today, and will resume on Tuesday, but will keep you updated if anything changes on the tariff front over the long weekend.