NEW YORK/LONDON :Major stock indexes and the dollar fell on Friday after U.S. President Donald Trump unleashed his latest trade threats, recommending 50 per cent tariffs on European Union imports from June 1 and saying he may impose a 25 per cent tariff on any Apple iPhones manufactured outside the U.S.
Shares of Apple were down 2.5 per cent in early New York trading, while the Nasdaq was down more than 1 per cent. European shares also fell sharply.
The dollar index, which measures the greenback against a basket of currencies, fell 0.46 per cent to 99.45, with the euro up 0.35 per cent and the dollar down 0.81 per cent against the yen. The dollar index was on track for a weekly loss.
Government bonds in the United States and Europe climbed, however, as the assets suddenly found favor from haven buyers after sustaining heavy pressure this week from rising concerns about Trump’s tax cuts and the White House’s ballooning debt pile.
Trump said in a post on his Truth Social network: “The European Union, which was formed for the primary purpose of taking advantage of the United States on TRADE, has been very difficult to deal with.”
This was the latest event in a jittery week for global markets after Moody’s late last Friday downgraded the U.S. credit rating and the U.S. House of Representatives on Thursday narrowly approved Trump’s sweeping tax cuts.
“Tariffs are back at the forefront,” said Oliver Pursche, senior vice president and advisor for Wealthspire Advisors in Westport, Connecticut.
“I think the 25 per cent tariffs on iPhones and Apple was a little bit of a surprise. It seemed like there was going to be an exemption there, and the market is reacting more to that than the EU news, and is interpreting that as a hardening of the stance by President Trump and the administration as opposed to seeking a negotiating path.”
The Dow Jones Industrial Average fell 284.70 points, or 0.68 per cent, to 41,576.68, the S&P 500 fell 51.16 points, or 0.88 per cent, to 5,790.85 and the Nasdaq Composite fell 221.02 points, or 1.17 per cent, to 18,704.71.
MSCI’s gauge of stocks across the globe fell 4.88 points, or 0.56 per cent, to 866.13. The pan-European STOXX 600 index fell 1.06 per cent.
The new tax-cut bill is expected to add almost $4 trillion to the U.S. federal government’s $36 trillion debt pile.
Yields on 30-year Treasuries, which had hit 19-month highs early on Thursday, were down on Friday in response to fresh tariff fears.
The 30-year bond yield was last down 1.7 basis points at 5.0468 per cent. The yield on benchmark U.S. 10-year notes fell 3.4 basis points to 4.519 per cent, from 4.553 per cent late on Thursday.
Gold, which has surged in recent months as economic anxiety as risen, was higher. Spot gold rose 1.47 per cent to $3,342.49 an ounce.
U.S. crude rose 0.33 per cent to $61.40 a barrel and Brent rose to $64.58 per barrel, up 0.22 per cent on the day.
