Trump tears up EU tariff deal, raises duties

What happened: President Trump has escalated trade tensions with the EU, threatening to raise tariffs to "much higher" levels if the EU fails to ratify its trade agreement with the U.S. by July 4. He also threatened a 100% tariff on French wines over the Digital Services Tax. After initially threatening to tear up part of the EU trade deal, Trump walked back this threat but maintained the July 4 deadline.

Market impact: European shares are set to open lower as investors react to Trump's proposed tariffs on 60 countries, including the EU. The auto sector is particularly vulnerable, with companies like Volkswagen, BMW, and Daimler potentially facing higher U.S. import duties. French wine producers, such as LVMH's Château d'Yquem and Pernod Ricard's Mumm, could also be affected by the threatened tariff on French wines.

What to watch next: Investors should monitor the EU's response to Trump's ultimatum and any retaliatory measures it may take. The next key catalyst is the EU's decision on whether to meet Trump's July 4 deadline for tariff reduction. Additionally, watch for any progress in U.S.-EU trade negotiations, with the next round of talks scheduled for mid-June.