PayPal's shares dropped 5% following concerns raised by a European Union lawmaker about the possible impact of escalating trade tensions and tariffs between the U.S. and Europe on payment firms.
The uncertainty surrounding tariffs and increasing trade actions have unsettled global markets, leading to volatility, straining supply chains, and altering investor sentiment across various industries.
Earlier this week, U.S. President Donald Trump suggested that larger tariffs could be imposed on the European Union and Canada if they collaborate "to do economic harm to the USA."
Bernd Lange, the head of the European Parliament's international trade committee, noted that U.S. companies have significant economic interests in this regard, mentioning the potential for charging fees on services like PayPal or Google.
Separately, a German government spokesperson indicated that "nothing is off the table" concerning punitive measures in response to the potential U.S. tariffs.
PayPal chose not to comment on the situation.
Imposing tariffs on finance and payments is generally challenging, as these sectors rely on digital transactions rather than cross-border trade in physical goods, complicating traditional trade enforcement.
Analysts expressed skepticism about the likelihood of such measures being enacted. Argus Research analyst Stephen Biggar remarked, "Not a lot of details here. Definitely 'sell first and ask questions later' for the stock. Tariffs have been mainly a negotiating tool for us, so it’s unclear how much of this will ultimately be implemented."
Tariffs impact the global economy by raising costs for businesses, disrupting supply chains, and dampening trade flows, often leading to inflationary pressures and slower growth.
Since his inauguration in January, Trump's presidency has been characterized by threats, reversals, and delays. European Union officials are working to manage tensions with the U.S. in an effort to prevent a trade war.