Europe Stocks Dive Nearly 3% on Trump Tariff Threat

On Friday, global markets were rocked after Donald Trump made a bold statement on Truth Social, targeting the European Union. He declared that trade talks with the EU had made “no progress” and proposed a 50% tariff on EU goods starting June 1.

Additionally, he threatened that if Apple does not relocate its iPhone production to the U.S., the company should pay a minimum 25% tariff.

The post sent immediate shockwaves through global markets. European stocks plunged during trading hours, with the benchmark Stoxx 50 index falling nearly 3%. U.S. stock futures also tumbled, with major indices dropping over 1%.

Apple’s premarket share price fell nearly 4%.

While gold, a safe-haven asset, surged sharply.

Although Trump’s post was the immediate catalyst, the market’s dramatic sell-off may also reflect deeper vulnerabilities rooted in overly optimistic sentiment. JPMorgan CEO Jamie Dimon had already warned that the full economic impact of tariffs had not yet surfaced, and that investors were underestimating the risks. “People feel good because they haven't seen the real impact of tariffs yet,” Dimon said. “Markets go down 10%, then rebound 10% — that’s an extraordinary level of complacency.”

Dimon emphasized that the U.S. cannot quickly replace imports with domestic goods, noting that building a factory takes at least three to four years. He also warned that earnings expectations for S&P 500 companies are excessively optimistic. As companies retract or lower their guidance amid growing uncertainty, earnings forecasts are likely to fall. “At the start of the year, earnings growth was expected at around 12%, but six months later it may drop to 0%,” he cautioned.

Dimon added that inflation and stagflation risks in the U.S. are higher than many assume — possibly double what markets expect. “We’ve had 15 years of very loose credit conditions, with new players, new covenants, different leverage levels — leverage on top of leverage,” he said. “In every recession, credit is worse than people anticipate.”

He also pointed to the U.S.'s massive budget deficit, which recently led Moody’s to downgrade the country’s credit rating. “The Fed appears almost complacent, thinking it can manage the economy — but I don't believe they can,” Dimon remarked.

As for Apple, Trump’s call to move its production lines back to the U.S. seems unrealistic in the short term. Apple has no smartphone production facilities in the U.S. at present. While CEO Tim Cook has pledged to hire more American workers and invest billions in the U.S. over the next four years, relocating the entire iPhone production operation would face immense technical, cost, and timeline hurdles.