Dollar, stocks slip as Trump targets Europe and Apple in tariff threats
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NEW YORK :Major stock indexes and the dollar eased on Friday after U.S. President Donald Trump unleashed his latest trade threats, recommending 50 per cent tariffs on European Union imports from June 1 and considering a 25 per cent tariff on any Apple iPhones made outside the U.S.
Shares of Apple fell 3 per cent in late afternoon New York trading, while the three major U.S. stocks indexes were weaker but well off session lows. European shares ended lower.
The dollar index, which measures the greenback against a basket of currencies, fell 0.83 per cent to 99.08, with the euro up 0.74 per cent at $1.1364 and the dollar down 1.07 per cent against the Japanese yen. For the week, the dollar is down 1.5 per cent, on track for its biggest weekly percentage decline since mid-April.
Government bonds in the United States and Europe climbed on safe-haven buying after sustaining heavy pressure this week from rising concerns about Trump's tax cuts and the White House's ballooning debt pile.
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Trump said in a post on his Truth Social network: "The European Union, which was formed for the primary purpose of taking advantage of the United States on TRADE, has been very difficult to deal with."
This was the latest event in a jittery week for global markets after Moody's downgraded the U.S. credit rating late last Friday and the U.S. House of Representatives narrowly approved Trump's sweeping tax cuts on Thursday.
"Tariffs are back at the forefront," said Oliver Pursche, senior vice president and advisor for Wealthspire Advisors in Westport, Connecticut.
"I think the 25 per cent tariffs on iPhones and Apple was a little bit of a surprise. It seemed like there was going to be an exemption there, and the market is reacting more to that than the EU news, and is interpreting that as a hardening of the stance by President Trump and the administration as opposed to seeking a negotiating path."
The Dow Jones Industrial Average fell 147.48 points, or 0.35 per cent, to 41,711.61. The S&P 500 dropped 26.30 points, or 0.45 per cent, to 5,815.71 and the Nasdaq Composite slid 147.13 points, or 0.78 per cent, to 18,778.60.
All three major U.S. stock indexes were down more than 1 per cent early in the day.
MSCI's gauge of stocks across the globe dropped 1.08 points, or 0.12 per cent, to 869.93. The pan-European STOXX 600 index fell 0.93 per cent.
The White House paused most of the punishing tariffs Trump announced in early April against nearly every country. He left in place a 10 per cent baseline tax on most imports, and later reduced his massive 145 per cent tax on Chinese goods to 30 per cent.
"Markets go through a cycle with tariffs - freak out and sell when they are announced ..., freak out and buy (when) they are paused," said Jamie Cox, managing partner at Harris Financial Group in Richmond, Virginia.
The new tax-cut bill is expected to add almost $4 trillion to the U.S. federal government's $36 trillion debt pile.
The 30-year Treasury yield, which had hit 19-month highs early on Thursday, fell in response to fresh tariff fears.
The benchmark U.S. 10-year note yield fell 4.4 basis points to 4.509 per cent, from 4.553 per cent late on Thursday. The 30-year bond yield fell 3.3 basis points to 5.0311 per cent.
Gold, which has surged in recent months as economic anxiety has risen, was higher. Spot gold rose 2.14 per cent to $3,364.74 an ounce.
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