LONDON, May 23: Stock markets tumbled Friday after US President Donald Trump ended a lull in his trade war with threats of massive tariffs on Apple products and imports from the European Union.
Wall Street's main indexes fell at the open, with the broad-based S&P 500 shedding 1.2 percent and the tech-heavy Nasdaq falling by 1.5 percent as Apple shares sank 2.5 percent.
The Paris CAC 40 index was down 2.3 percent in afternoon deals while the Frankfurt DAX retreated by 1.8 percent, with shares in luxury and car companies taking a hit.
London's FTSE 100, which had been up earlier, fell into the red. The DAX had also been higher earlier in the day as German economic growth data was revised up.
Oil prices also reversed course to fall by around one percent while the dollar remained under pressure.
Trump's new threats revived investor concerns about his trade policies after a recent deal with Britain and a tariffs truce with China.
President Trump signs tariff orders
"All the optimism over trade deals wiped out in minutes -- seconds, even," said Fawad Razaqzada, market analyst at StoneX.
Trump said on his Truth Social platform that he was "recommending a straight 50% Tariff on the European Union" from June 1 as "discussions with them are going nowhere!"
"The EU is one of Trump's least favourite regions, and he does not seem to have good relations with its leaders, which increases the chance of a prolonged trade war between the two," said Kathleen Brooks, research director at XTB trading platform.
The US president had announced 20 percent tariffs on EU goods last month but suspended the measure to give space for negotiations.
Trump, however, maintained a 10 percent levy on imports from the 27-nation bloc and nearly every other nation around the world, along with 25 percent duties on the car, steel and aluminium industries.
He also threatened on Friday to hit Apple with a 25 percent tariff if its iPhones are not manufactured in the United States.
"Trump's attack on Apple looks like one of his negotiating tactics to us," Brooks said, noting that the threat comes as his tax-cut plan faces Senate debate after passing the lower house of Congress.
"This looks like a negotiating maneuver to get Apple to pay the bulk of their tax in the US, including taxes for non-US sales," she said.
"If this happens, then we would not be surprised to see the iPhone tariff disappear."
Trump's social media outburst rocked stock markets which had steadied following losses over concerns about the ballooning US debt and rising US borrowing costs.
Investors were already on edge after Moody's stripped the United States of its top-tier credit rating and the House of Representatives approved Trump's tax cut plan, which critics say would add to the country's debt pile.
The yield -- or borrowing costs -- on 10-year and 30-year US government bonds surged this week as investors worry about the fiscal health of the world's biggest economy.
The yields eased late Thursday.
Trump's tax package, which now goes to the Senate, had faced scepticism from fiscal hawks who fear the country is headed for bankruptcy.
Independent analysts warn it would increase the deficit by as much as $4 trillion over a decade.
But the White House insists it will spur growth of up to 5.2 percent, ensuring it adds nothing to the $36 trillion national debt -- growth projections that are well outside the mainstream consensus.
