Trump intensifies trade war with 30% tariffs on EU and Mexico
President Donald Trump on Saturday imposed a 30 percent tariff on imports from Mexico and the European Union starting on August 1 after weeks of negotiations with the key trading allies failed to reach a more comprehensive trade deal. The fresh tariffs were announced in separate letters posted on Truth Social on Saturday. Earlier this week, Trump issued new tariff announcements for a number of countries, including Japan, South Korea, Canada and Brazil, as well as a 50 percent tariff on copper. The EU had hoped to reach a comprehensive trade agreement with the US for the 27-country bloc. The European Union had been bracing for the letter from Trump outlining his planned duties on the United States' largest trade and investment partner after a broadening of his tariff war in recent days.
The EU initially hoped to strike a comprehensive trade agreement, including zero-for-zero tariffs on industrial goods, but months of difficult talks have led to the realization it will probably have to settle for an interim agreement and hope something better can still be negotiated.
The 27-country bloc is under conflicting pressures as powerhouse Germany urged a quick deal to safeguard its industry, while other EU members, such as France, have said EU negotiators should not cave into a one-sided deal on US terms. Trump's cascade of tariff orders since returning to the White House has begun generating tens of billions of dollars a month in new revenue for the US government. US customs duties revenue shot past $100 billion in the federal fiscal year through to June, according to US Treasury data on Friday.
Canada tariff
Canada will face a 35 percent tariff on exports to the United States starting August 1, President Donald Trump said in a late-night letter to Prime Minister Mark Carney that upends negotiations between the close allies. The notice was the latest of more than 20 such letters Trump has issued since Monday as he continues to widen a global trade war, adding in an interview that countries which have yet to receive a letter from him would see a 15 percent or 20 percent levy.
Canada's 35 percent tariff marks a step up from an existing 25 percent level, but products complying with the United States-Mexico-Canada Agreement (USMCA) are expected to remain exempt, a Trump administration official told AFP. Canadian energy resources are anticipated to still face a lower levy, the official said, while noting that Trump has yet to make final decisions on the matter.
Trump told reporters Friday that Ottawa reached out following the release of his letter: 'I think it was fairly well received. It is what we need. So we'll see what happens.'
Canada and the United States have been locked in trade negotiations in hopes of reaching a deal by July 21, but Trump's latest threat appeared to have shifted that deadline. Both Canada and Mexico are trying to find ways to satisfy Trump so the USMCA free trade deal uniting the three countries can be put back on track. 'Throughout the current trade negotiations with the United States, the Canadian government has steadfastly defended our workers and businesses. We will continue to do so as we work towards the revised deadline of August 1,' Carney posted Thursday night on X.
The USMCA replaced the previous NAFTA accord in July 2020, after Trump successfully pushed for a renegotiation during his first term in office. It was due to be reviewed by July next year, but Trump has thrown the process into disarray by launching trade wars after he returned to office in January.
Canadian and Mexican products were swiftly hit by 25 percent US tariffs this year, with a lower rate for Canadian energy. Trump targeted both North American neighbors saying they did not do enough on illegal immigration and the flow of illicit drugs—particularly fentanyl—across borders. Canada contributes less than one percent of the drug to the illicit US supply, according to Canadian and US government data. Trump eventually announced exemptions for goods entering his country under the USMCA, covering a large range of products.
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