Market sentiment turned negative on Friday after President Donald Trump issued two new tariff threats against Apple (NASDAQ: AAPL) and the European Union, soiling some of the bullish momentum of recent weeks as the S&P 500 Index (NYSE: SPY) erased all of its tariff-induced lows.
The broader market index lost over 0.8% in morning trade, while the Dow Jones Industrial Average (NYSE: DIA) dropped over 300 points and the tech-heavy Nasdaq Composite (NASDAQ: QQQ) fell by 1.1%.
In a post on his social media platform Truth Social, Trump reiterated his stance that iPhones meant to be sold in the United States should be manufactured domestically, warning that "a tariff of at least 25% must be paid by Apple," if they fail to meet his goals.
Apple's shares fell on the threat, as the tech giant is the first company to be publically singled out by Trump in his second term, pulling its stock below its key $3 trillion market cap on Friday. Apple has said previously that it is working to move some of its manufacturing from China into India. Apple builds around 90% of its iPhones in China through its partnership with Foxconn.
Wall Street analysts have estimated that shifting iPhone production into the U.S. would raise the price of Apple's flagship product, with Wedbush's Dan Ives calculating the iPhone 16 Pro's price could climb from its current retail value of about $1,000 to roughly $3,500.
"The pressure from Trump Administration on Apple to build iPhone production in the US as we have discussed this would result in an iPhone price point that is a non-starter for Cupertino and translate into iPhone prices of ~$3,500 if it was made in the US which is not realistic as this would take 5-10 years to shift production to the US," Ives wrote in a note Friday. "We believe the concept of Apple producing iPhones in the US is a fairy tale that is not feasible."
Trump also issued threats against the European Union on Friday, writing in a separate Truth Social post that trade talks "are going nowhere" with the bloc, adding that its leaders are "very difficult to work with." Trump recommended for his administration to issue "a straight 50% tariff" on the E.U. starting in June.
"Their powerful Trade Barriers, Vat Taxes, ridiculous Corporate Penalties, Non-Monetary Trade Barriers, Monetary Manipulations, unfair and unjustified lawsuits against Americans Companies, and more, have led to a Trade Deficit with the U.S. of more than $250,000,000 a year, a number which is totally unacceptable. Our discussions with them are going nowhere!" he wrote.
Trump's new trade comments have rattled a pretty muted Wall Street on Friday as investors trade ahead of the Memorial Day market holiday on Monday. Many market participants had hoped trade tensions were behind them after the White House eased much of the high levies enacted in early April and reached preliminary deals with the United Kingdom and China.
However, macroeconomic uncertainties remained below the surface of this recent positive momentum, fueled further by Moody's downgrade of the federal government's sovereign debt late last week. Investors are also concerned over the nation's ability to solve its growing deficit crisis as Trump's "big, beautiful" tax bill passed its first congressional hurdle on Thursday, with many expects estimating the legislation in its current state could add on trillions of new debt over the next decade.
Friday's losses added to the market's projected losing week, with the S&P 500, Dow and Nasdaq all down more than 2%.