New York CNN  — 

Markets thought they had a serious debt problem. Now they have a trade war problem to worry about again.

Stocks fell Friday after President Donald Trump brought the trade war back to the forefront with threats of massive tariffs against America’s most valuable company and one of its most important trading partners.

In quick succession, Trump posted on Truth social Friday morning that he would impose a 25% tariff on Apple if it refused to make iPhones in the United States. Minutes later, Trump said he would recommend a 50% tariff on goods imported from the European Union.

The Dow was down 325 points, or 0.7%. The broader S&P 500 was down 0.9%, and the tech-heavy Nasdaq Composite slid 1.2%.

Wall Street’s fear gauge, the CBOE Volatility Index, surged 10%.

The US dollar index, which measures the dollar’s strength against six major foreign currencies, slid 0.6%. Gold, a safe haven during uncertainty, surged 1.7%.

“Markets once again face the fear of high tariffs on a major trading partner,” said Rob Haworth, senior investment strategy director at US Bank Asset Management.

Wall Street in recent weeks had begun to shift focus away from tariffs and toward Trump’s tax bill — its own headache for markets — after the United States and China in May opened trade negotiations and agreed to substantially lower tariffs, easing investors’ nerves about the trade war.

But Trump’s new threat of tariffs on the EU was a sharp reminder that policy uncertainty remains. David Doyle, head of economics at Macquarie, said in a recent note that it is not “all-clear” on the trade war front, and tariffs remain a “substantial headwind” to the US economy.

“Today’s early market action does not approve of a threat directed at another corporate, and the idea of a 50% EU tariff rate,” analysts at Citi said in a Friday note. “This is sure giving us déjà vu.”

The S&P 500 sank in early April after Trump announced massive “reciprocal” tariffs, and rebounded sharply after the president a week later announced a 90-day pause on most of them. Investors have been on edge about potential developments during the 90-day pause, which is set to end in July.

“This calls into question whether investors can trust that any pauses announced by the Administration are actually solid, which only further muddies the landscape,” said Ross Mayfield, investment strategist at Baird. “Expect volatility to persist.”

“We believe that this morning’s social media posts about a 50% tariff on the EU are primarily a negotiating tactic,” analysts at Barclays said in a Friday note. “But today’s developments, including the posts about iPhones, do highlight that the US has not turned the page on tariffs and that more trade policy volatility lies ahead.”

Scott Ladner, chief investment officer at Horizon Investments, said the market reaction to Trump’s threat of 50% tariffs on the EU will likely be more “measured” than past tariff announcements because “the playbook now involves a high likelihood of Trump caving at some point.”

“But the uncertain timing and not-zero chance that he doesn’t cave will keep equities on edge for the next couple of weeks, at least,” Ladner said.

The United States so far during the 90-day pause has only announced a trade deal with the United Kingdom.

Apple (AAPL) on Friday dropped almost 3% after Trump’s threat to impose tariffs on the company’s products unless it moves manufacturing to the United States. The tech giant has tumbled 20% this year as it has been caught in the crossfire of Trump’s trade war.

And it’s not just Big Tech taking a hit. Retirement plans like 401(k)s are often invested in funds that track the S&P 500, and large companies like Apple make up a notable portion of the index’s value. As Trump’s trade war roils blue-chip stocks like Apple, it can impact people’s retirement savings.

“You just can’t continue to keep an economy and companies operating in a cloud of extraordinarily high uncertainty forever without some economic consequences eventually,” Ladner said. “That’s going to be the tug of war the next several months.”

The tariff jolt on Friday comes after markets this week have already been floundering under pressure from the bond market. Investors this week balked at Trump’s “big, beautiful” tax bill, and weak demand for US government bonds sent yields surging.

“Markets are looking for a little more fiscal discipline, they’re concerned,” Federal Reserve Governor Chris Waller told Fox Business on Thursday.

“There does seem to be, you know, a risk-off on American assets across the board, not just government debt, but everything,” Waller said. “And whether that continues in the future or not, I don’t know.”

The yield on the 10-year Treasury note on Friday fell below 4.5% as investors snapped up bonds amid renewed trade uncertainty.

In Europe, markets tumbled after Trump’s threat of a higher tariff for the region that could go into effect June 1. The benchmark STOXX 600 index was down 1%. Germany’s DAX fell 1.5% and France’s CAC index slid 1.7%.

The S&P 500 is coming off of three days in the red as a recent rebound in US markets has stalled. The benchmark index is down slightly on the year.

This is a developing story and will be updated.