- The CAC 40 in Paris falls 3% and the DAX in Frankfurt falls 2.5% as Trump threatens the EU with 50% tariffs.
- Luxury goods companies and car markers are among the biggest fallers in afternoon trade.
- The FTSE 100 reverses morning gains to trade lower amid concerns about impact globally.
- Apple’s shares fall in pre-market trading as President Trump vows to impose 25% tariffs on iPhone not made in the USA.
Susannah Streeter, head of money and markets, Hargreaves Lansdown:
‘’Trump has made it clear that the EU is still out in the cold when it comes to trade negotiations and it’s sent a shiver through European stock markets. While the US administration has shown a willingness to broker deals with other nations around the world, the President’s chilly tone towards Europe has sparked fresh fears that punishing tariffs could become a reality for the bloc. Even though the US President has become known for a harsh bark but a less painful bite, it does seem as though talks have hit an impasse and that’s sparked a sell-off. Luxury goods companies Hermes, LVMH and Hermes, LVMH are among the top fallers, given that US shoppers are likely to baulk at big ticket hikes. Car makers Volkswagen, Renault and Stellantis are also sharply lower amid concerns that the huge US market could effectively be closed. This has taken the shine off first quarter German GDP numbers which were unexpectedly revised upwards to 0.4% from an initial estimate of 0.2%. This had been helped by an influx of overseas orders for German goods before the full force of tariffs hit.
Trump’s latest threats are also reigniting some fears about where other negotiations may end up. Time is ticking on the pause brokered between the US and China, but more onerous duties could still descend on Chinese goods. The internationally-focused FTSE 100 has lost early gains and made a hand brake turn, heading deeper into the red. Investors are mulling the repercussions of this latest tariff twist, and realisation is dawning that the trade war is still very much alive.
Trump also has Apple in his sights, threatening to impose 25% import tariffs if its phones sold in the U.S. are not made in the country. His latest rhetoric has nibbled away at Apple’s valuation again. The stock is down more around 20 % this year, as investors assess the how trade policy is taking a bite out of the company’s prospects. Apple is particularly vulnerable to the changing winds in the tariff storm. It had hoped to swerve more onerous tariffs on its devices made in China, by shifting a chunk more production to India. But now this strategy doesn’t look like it’ll act as an exit pass from tariff punishment. Prices of handsets look set to rise, given iPhones will end up being more expensive, if the threats turn into concrete trade policy. While die-hard fans will still be prepared to pay big bucks for Apple’s kit, it’ll be much harder to shift among middle-class masses who are already dealing with price hikes on other goods, from Nike trainers to toys sold in Walmart. It’ll add fuel to inflationary concerns, which are already weighing down consumer sentiment.”
