PayPal app is seen on a smartphone in this illustration taken, July 13, 2021. REUTERS/Dado Ruvic/Illustration/File Photo
(Reuters) -PayPal's shares fell 5% on Friday after comments from a European Union lawmaker raised concerns that payments firms could get swept up in escalating trade tensions and potential tariffs between the U.S. and Europe.
Uncertainty over tariffs and mounting trade actions have unsettled global markets, causing volatility, straining supply chains and shifting investor sentiment across industries.
Earlier this week, U.S. President Donald Trump said larger tariffs could be placed on the European Union and Canada if they both work together "to do economic harm to the USA."
"In the case of digital service providers, there is also a huge economic interest on the part of U.S. companies," said Bernd Lange, the head of the European Parliament's international trade committee. "In this respect, you can also look at charging fees on PayPal or Google."
Separately, on Friday, a German government spokesperson also said "nothing is off the table" with regard to punitive measures in response to the threat of U.S. tariffs.
PayPal declined to comment on the matter.
Tariffs on finance and payments are typically difficult to impose, as these sectors rely on digital transactions and services rather than cross-border trade in physical goods, complicating traditional trade enforcement.
Analysts remained skeptical about the likelihood of such a move.
"Not a lot of details here. Definitely 'sell first and ask questions later' for the stock," Argus Research analyst Stephen Biggar said. "Tariffs have to us been a negotiating tool so not sure how much, if any, of this will ultimately be implemented."
Tariffs ripple through the global economy by raising costs for businesses, disrupting supply chains and dampening trade flows, often leading to inflationary pressures and slower growth.
Trump's whirlwind tariff offensive since his January inauguration has been marked by threats, reversals and delays.
European Union officials are trying to ease tensions with the U.S. to prevent a trade war.
(Reporting by Manya Saini in Bengaluru; Editing by Krishna Chandra Eluri and Alan Barona)
