Markets plunge over threat of 50% tax on EU goods

Stock markets dropped sharply yesterday after US president Donald Trump reignited fears of a trade war by threatening to impose high tariffs on the EU and smartphone giant Apple.

- JANE DALTON, DAVID MADDOX

European shares fell 1.7 per cent, the US S&P 500 fell 1.1 per cent in early trading and the tech-heavy Nasdaq fell 1.6 per cent.

The Dow Jones Industrial Average fell 408 points, or 1 per cent.

Mr Trump threatened to impose a 50 per cent tax from next month on all imports to the US from the EU, including on pharmaceuticals and luxury items. He also warned Apple and Samsung of a 25 per cent tariff on any iPhones manufactured outside the United States but sold there.

"This latest threat is worse than the worst-case scenario," said Fiona Cincotta, senior market analyst at City Index.

US Treasury secretary Scott Bessent said Mr Trump did not believe EU trade offers to the US were good enough and that he hoped the new tariff threat would "light a fire" under officials in talks with Washington.