Trump Tariff Threat Hits Europe: Stocks Sink As 50% Duties Loom

President Donald Trump’s threat to impose a sweeping 50% tariff on all European Union imports starting June 1 sparked a broad selloff across European markets Friday, triggering fears of a transatlantic trade war just as global growth faces renewed pressure.

In a post on Truth Social, Trump said the EU’s "powerful Trade Barriers, VAT Taxes, ridiculous Corporate Penalties, Non-Monetary Trade Barriers, Monetary Manipulations, unfair and unjustified lawsuits against American Companies" were to blame for an annual trade deficit exceeding $250 billion, which he called "totally unacceptable."

The proposed tariff would exempt goods manufactured in the United States, potentially creating sharp distortions for EU-based exporters and global supply chains.

European Benchmarks Tumble

The fallout was immediate in markets. The Euro STOXX 50 index – as closely tracked by the iShares MSCI Eurozone ETF (NYSE:EZU) – dropped 3%, Italy's FTSE MIB sank 2.9%, France's CAC 40 lost 2.6% and Spain's IBEX 35 fell 2.2%.

Germany's DAX, as tracked by the iShares MSCI Germany Index Fund (NYSE:EWG), which is home to many export-heavy firms, slid 2.3%.

Financial stocks bore the brunt of the decline, with Deutsche Bank AG (NYSE:DB) falling 6.1%, Société Générale SA (OTCPK: SCGLY) down 5.3% and Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) sliding 5%.

Industrial and luxury exporters also came under heavy pressure, including Bayerische Motoren Werke AG (OTCPK: BMWYY), or BMW (−4.5%), UniCredit SpA (OTCPK: UNCRY) (−4.5%) and EssilorLuxottica SA (OTCPK: ESLOY) (−4.2%).

Export Exposure To US Trade Is Key

The tariff threat has placed a spotlight on European companies heavily reliant on U.S. revenues.

In Germany, Adidas AG (OTCPK: ADDYY) derives roughly a third of its revenue from the United States, while SAP SE (NYSE:SAP) generates about 40% of its turnover from North America.

Chipmaker Infineon Technologies AG (OTCPK: IFNNY) is also significantly exposed due to its automotive and electronics customers.

French luxury and tech firms are equally at risk. LVMH Moët Hennessy Louis Vuitton SE (OTCPK: LVMUY) earns close to 25% of its revenue in the U.S., while Dassault Systèmes SE (OTCPK: DASTY) has a strong footprint in North American enterprise software. Hermès International SA (OTCPK: HESAY) pulls about 20-25% of its sales from the American market.

Italian brands like Ferrari NV (NYSE:RACE), with over 30% of sales from the U.S., and EssilorLuxottica SA (OTCPK: ESLOY), which owns Oakley and Ray-Ban, are also vulnerable.

In the Netherlands, tech heavyweight ASML Holding NV (NASDAQ:ASML) earns about 20-25% of revenue from the U.S., and Koninklijke Philips NV (NYSE:PHG) maintains a major healthcare business across North America.

EU Retaliation Risk Grows For US Stocks

For U.S. corporations with heavy exposure to Europe—particularly in tech, autos, agriculture and aviation—the economic consequences could be significant if the European Union responds in kind.

The 2018 EU countermeasures to Trump’s steel tariffs included duties on motorcycles, bourbon and orange juice—strategic hits on U.S. swing-state exports.

EU officials may also revisit tech taxation disputes, where U.S. firms like Apple Inc. (NASDAQ:AAPL), Alphabet Inc. (NASDAQ:GOOGL) and Microsoft Corp. (NASDAQ:MSFT) are already under regulatory scrutiny.

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