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Euro pares gains after Trump talks of hitting EU with 50%

tariff

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Yen catches safe-haven boost as dollar index sinks

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Trump also threatens 25% tariffs to Apple ( AAPL ) on non-US made

iPhones

(Updates throughout with Trump EU tariff threat)

By Amanda Cooper

LONDON, May 23 (Reuters) - The euro fell on Friday,

reversing earlier gains after U.S. President Donald Trump said

he would recommend hitting the European Union with 50% tariffs

from June 1, reigniting investor fears over the impact of duties

on the world economy and trade.

In a post on his Truth Social platform, Trump said the EU

was "very difficult to deal with" and "our negotiations with

them are going nowhere."

"Therefore, I am recommending a straight 50% Tariff on the

European Union, starting on June 1, 2025. There is no Tariff if

the product is built or manufactured in the United States."

The euro had risen by almost 0.8% on the day

earlier, after Trump in a separate post threatened to impose a

25% tariff on Apple ( AAPL ) on all iPhones not made in the

United States. It was last up 0.45% at $1.1336.

The dollar pared some losses against the Japanese yen and

the pound after Trump's post on EU tariffs, but was still

heading for its first weekly drop against a basket of currencies

in five weeks.

After Moody's last week downgraded its U.S. debt ratings,

investor attention this week has honed in on the country's $36

trillion debt pile and Trump's tax bill, which could add

trillions of dollars more to it.

Dubbed by Trump as a "big, beautiful bill", it narrowly

passed the Republican-controlled U.S. House of Representatives

and now heads to the Senate for what is likely to be weeks of

debate, keeping investor sentiment fragile in the near term.

After the U.S. and China agreed earlier this month to

suspend their reciprocal tariffs, investor focus has returned to

vulnerabilities in U.S. government finances.

Trump's posts on Friday brought tariffs and trade roaring

back to the fore.

"The focus had very much been on the U.S. fiscal position

following the passage of Trump's 'big beautiful bill'. But this

has swung attention firmly back to trade tariffs. It's more bad

news for the U.S. dollar, bringing 2025 lows into focus. I think

it does nothing to help avert the 'sell America'," City Index

strategist Fiona Cincotta said.

The yen, which has served as a safe haven for

investors seeking alternatives to the dollar, strengthened,

leaving the dollar down nearly 1% at 142.52.

The Japanese currency got a boost earlier from data showing

Japan's core inflation accelerated at its fastest annual pace in

more than two years in April, raising the odds of another

interest rate hike by year-end.

The data underscores the quandary facing the Bank of Japan,

which must grapple with price pressures from persistent food

inflation as well as economic headwinds from Trump's tariffs.

Super-long Japanese government bonds have also scaled record

highs this week, although they were steady on Friday.

The Swiss franc also rallied, pushing the dollar

down 0.7% to 0.8225 francs.