U.S. investors awoke to another round of economic saber-ratting this morning, as President Trump threatened a 50% tariff on European Union goods beginning June 1, claiming “our discussions with them are going nowhere”.
This comes on the heels of a trade proposal earlier in the week from the EU that was met with frustration by those close to the negotiations inside the Trump administration, as Commerce Secretary Howard Lutnik noted discussions have proved “impossible”. The EU is said to already be preparing for the worst, with plans to levy an additional $107bn in US exports should negotiations fall through. President Trump also suggested Apple would face, at minimum, a 25% tariff if iPhones are not manufactured in the U.S. moving forward.
In early trading, the flight to safety is well underway. U.S. Treasuries and gold both rallied, the dollar weakened another 0.4%, and S&P futures are down ~1.5%. The economic calendar is otherwise relatively light ahead of the extended Memorial Day weekend.
Markets will close early this afternoon, with fixed income trading ending at 2PM ET.
Michael Oravetz Managing Director, Investment Management Group
