Trump threatens 30 percent tariffs on the EU, Mexico

Yahoo

3 days ago

President Donald Trump on Saturday threatened 30 percent tariffs on two major U.S. trading partners — the European Union and Mexico.
In letters posted to Truth Social, the president said each country would face the new tariffs starting Aug. 1, though he left the door open to further talks to bring down that rate, as he did in missives to other foreign leaders this week. The new levies represent a 10 percentage point increase for the European Union from the 'Liberation Day' tariff rates Trump announced in April, and a 5 percentage point boost from the 25 percent rate Mexico was slapped with in March related to the fentanyl crisis.
Together, the two trading partners account for about one-third of U.S. imports. The United States imported $605 billion worth of goods last year from the 27 nations of the EU, whose major members include France, Germany, Spain and Italy. It imported $505 billion from Mexico, a member of the U.S.-Mexico-Canada Agreement that Trump negotiated during his first term to replace the 1990s-era North American Free Trade Agreement.
The U.S. trade deficit with the EU was the second highest of any trading partner in 2024, coming below China, while the deficit with Mexico was the third highest.
The messages to Mexico and the EU follow a week of similar letters sent to U.S. trading partners, which began with South Korea and Japan. Trump sent letters to more than two dozen countries, many of them emerging economies that have not had the kind of robust trade talks with the U.S. that major trading partners have had.
The fact that the letters to the EU and Mexico came so late in the week appear to signal that they remain in better standing with Trump than those that received earlier letters. The decision to send letters first to South Korea and Japan was widely seen as an effort to single out those two countries amid stalled negotiations.
Negotiations with both trading partners targeted Saturday are ongoing and, in the case of the EU, appear to be closing in on some sort of framework for a trade deal. Earlier this week, Commerce Secretary Howard Lutnick said a deal with the EU was on Trump's desk for a final decision.
In the letter, Trump asserts the EU 'will allow complete, open Market Access to the United States, with no tariffs being charged to us, in an attempt to reduce the large Trade Deficit.' It's not clear if the EU has agreed to such a term or if Trump is merely trying to impose that outcome.
European leaders on Saturday responded by saying they were still interested in negotiations — but pointedly did not rule out retaliation if it became necessary.
European Commission President Ursula von der Leyen posted on X that while Europe would continue working toward an agreement with the U.S. before the Aug. 1 deadline, they would also continue to "safeguard EU interests on the basis of proportionate countermeasures."
'A 30% tariff on EU exports would hurt businesses, consumers and patients on both sides of the Atlantic,' she wrote in the post.
Trump had also warned in his letters both the EU and Mexico he will match any attempt to retaliate against U.S. exports.
The EU is dropping its plans to levy a tax on digital companies, an important concession to the U.S. that could set the stage for a deal in the coming weeks. And the bloc has telegraphed confidence that it will reach an agreement ahead of the Aug. 1 deadline.
In response to Trump's tariff threats, Irish Prime Minister Micheál Martin said he supported von der Leyen and her chief trade negotiator, Maroš Šefčovič, saying he preferred "a negotiated solution."
Ireland, Europe's leading pharmaceuticals exporter to the U.S., is particularly vulnerable to tariffs. Trump has threatened to implement a 200 percent tariff on pharmaceuticals.
In a statement, the office of Italian Prime Minister Giorgia Meloni said the hope is to avert U.S. tariffs. 'It is now essential to remain focused on the negotiations, avoiding polarization that would make reaching an agreement more difficult,' the Palazzo Chigi said.
The letter to Mexico accused the country of failing to curb fentanyl smuggling, saying the cartels are trying to turn the U.S. into a 'Narco-Trafficking Playground.' Mexican President Claudia Sheinbaum recently pushed back on accusations from the Treasury Department that Mexican financial firms had laundered millions of dollars related to fentanyl trafficking.
The Mexican government also put out a statement Saturday indicating that a delegation met with U.S. officials on Friday to establish a working group to address 'the main issues in the relationship.'
The statement said Mexican negotiators were aware a letter would be coming and that while they believed it was "unfair treatment and that we disagreed" with the strategy, "Mexico has begun negotiations."
Trump's proposed tariff rate on Mexico is 5 percentage points lower than what he imposed on the U.S.'s other major North America trading partner: Canada. The Thursday letter said Canada would have a 35 percent tariff, also citing what the president called an inadequate push from Canadian officials to address fentanyl.
The tariffs on both Canada and Mexico will only be imposed on goods that do not comply with the 2020 USMCA, though the final decision will be up to Trump, according to White House official, granted anonymity to discuss the negotiations.
India is the last of the major U.S. trading partners that has yet to receive a letter, with the two countries said to be closing in on a deal. Trump recently told NBC News that many other trading partners will receive a final tariff rate of 15 to 20 percent.