U.S. Stocks Fall as Trump Rekindles Trade War With Fresh Tariff Threats

Major Indexes Slip as Markets React to Renewed Trade Hostilities and Apple Tariff Warning

U.S. equity markets stumbled on Friday as investors faced a renewed surge in trade war tensions prompted by former President Donald Trump’s aggressive tariff threats. In a pair of posts on Truth Social, Trump announced intentions to impose a 25% tariff on Apple if it does not manufacture iPhones in the U.S., and separately called for a 50% tariff on goods from the European Union, beginning June 1. This unexpected policy escalation rattled investor sentiment, sending major stock indexes lower ahead of the Memorial Day weekend.

At 3:10 p.m. in New York, key indexes showed a clear downward trend:

• S&P 500: 5,823.23, down 0.32%

• Dow Jones Industrial Average: 41,760.78, down 0.26% (-108.09 points)

• Nasdaq Composite: 18,817.55, down 0.58%

Tech heavyweight Apple Inc. led the declines after falling as much as 4% to $193.46, under pressure from the threatened 25% import duty on its non-U.S. production. The iPhone maker has steadily expanded its manufacturing footprint in India in recent years, a strategy now directly targeted by Trump’s protectionist rhetoric.

Highlights:

• Trump threatens Apple with 25% tariffs if it doesn’t manufacture iPhones in the U.S.

• 50% tariff proposed on EU imports starting June 1.

• S&P 500, Dow, and Nasdaq all posted losses on Friday.

• Apple shares fell up to 4% intraday amid tariff fears.

Dollar Dips, Treasury Yields Edge Lower as Investors Flee to Safe Havens

The market fallout extended beyond equities. The U.S. dollar index dropped as much as 0.8% during the session, before narrowing its losses to end the day down 0.5%, signaling a broader retreat from risk assets as geopolitical volatility escalated. The greenback’s decline followed weeks of relative stability driven by optimism over temporary tariff reprieves, which Trump has now effectively rescinded.

Bond yields dipped as traders moved into safe-haven U.S. Treasuries. The 10-year Treasury yield declined four basis points to 4.50%, after falling as much as nine points earlier. The 30-year yield fell three basis points to 5.03%, reflecting a mild risk-off rotation. The renewed tariff escalation has disrupted expectations for a quieter market as summer begins, adding layers of policy risk to an already fragile macro backdrop.

Highlights:

• U.S. dollar index down 0.5% as tariff uncertainty grows.

• 10-year Treasury yield falls to 4.50%; 30-year slips to 5.03%.

• Safe-haven buying reflects heightened investor anxiety over trade tensions.

Tariff Tensions Complicate Fed Rate Outlook as Powell’s Position Secured

The Federal Reserve’s monetary policy path is now more closely tied to the outcome of trade negotiations. Fed Governor Christopher Waller suggested that progress on tariff reduction could pave the way for rate cuts in the second half of 2025, but stressed that clarity is needed by July. Waller’s remarks, made in an interview on Fox Business, introduced cautious optimism — but that sentiment was quickly overshadowed by Trump’s tariff salvos.

“If we can get the tariffs down close to the 10%…then we’re in good shape for the second half,” Waller stated. However, the likelihood of such an outcome has diminished with Trump’s renewed confrontation against both Apple and the EU. Bespoke Investment Group’s Paul Hickey said that tariff issues are likely to dominate market attention as the 90-day tariff truce window nears its July 9 expiration.

Adding another layer of complexity, a Supreme Court ruling on Friday partially reinforced the Fed’s institutional stability by protecting Chair Jerome Powell from potential political dismissals, even as it opened the door for future presidents to remove other agency heads more easily. This ruling may slightly strengthen investor confidence in central bank independence amid increasing political turbulence.

Highlights:

• Fed’s Waller hints at possible rate cuts if tariff reductions materialize by July.

• Tariff conflict now central to near-term Fed policy expectations.

• Supreme Court ruling shields Powell from presidential removal, aiding policy continuity.

Trade War Risks Reignite Just as Market Found Its Footing

Friday’s sell-off comes after an impressive run for U.S. stocks — the S&P 500 had rallied nearly 11% in the past month, aided by softer trade rhetoric and signs of progress with China. The abrupt shift in tone by Trump has reversed some of those gains, underlining the fragility of investor optimism. Traders are now bracing for volatility through July, with tariffs, deficit anxieties, and interest rate uncertainties clouding the outlook.

The 50% tariff threat against the EU marks the most aggressive trade action proposed since the U.S.-China tariff wars in 2018–2019. Trump’s post accused the European Union of being “formed for the primary purpose of taking advantage of the United States on TRADE,” a claim that raised concerns over potential retaliatory actions by Brussels.

Highlights:

• S&P 500’s 11% rally in May faces reversal as new tariff threats emerge.

• Investors now focus on July 9 as critical tariff deadline.

• EU and Apple likely to respond to escalating trade war threats.