Mexico and the EU are still reeling from Donald Trump's surprise announcement of a 30 per cent tariff on the two major United States trading partners over the weekend. The announcement, made in copies of letters posted on Trump's social media, came after weeks of negotiations failed to reach comprehensive trade deals. EU trade ministers have met in Brussels to discuss their response, pledging unity within the bloc, and warning of countermeasures if negotiations with the US ultimately fail. Danish Minister of Foreign Affairs Lars Lokke Rasmussen has called the tariffs unacceptable and unjustified, but stresses negotiations to reach a deal remain the EU's priority. "We do not want a trade war with the US we want to avoid it and we had, I think many of us, want to thank the Commissioner for being very transparent in his negotiations with the U.S. team. The clear impression that we were very, very close in agreement in principle. Unfortunately, it wasn't possible due to this presidential letter, but it is still our major vision that we should reach an agreement." However, he warns the bloc will be prepared with countermeasures in the event that talks break down. "But we also want to send a clear signal that it must be a fair deal for everybody, and if that's not possible to reach, then we will leave out no options, and we know very well that we have a toolbox with a lot of tools." European Trade Commissioner Maros Sefcovic says the 30 per cent tariff would make it almost impossible to continue trading as before, with significant consequences for supply chains, and says the EU will do everything it can to ensure a different outcome. He says while he is hopeful talks will be successful, the new tariff threat has also strengthened the bloc's commitment to building internal trade agreements to protect EU interests. "We are very obviously also discussing what we can do to trade more with each other. That was a very clear message from the trade ministers today. Work as hard as possible on new market access, use the existing free trading agreements which are there, and we happen to have the free trade agreements now with all of these major trading partners and we intend to use them to the maximum.' President Trump says he's open to discussions with the EU and other trading partners before higher tariffs kick in on August 1. 'No, we're going to be talking to people. We have, you know, I watched the show this morning, they were talking about 'Well when is he's going to make the deal?' The deals are already made. The letters are the deals. The deals are made. There are no deals to make. They would like to do a different kind of a deal and we're always open to talk. We are open to talk, including to Europe. In fact, they're coming over, they'd like to talk.' In his letter to Mexico's leader, Mr Trump said the country has been helpful in stemming the flow of undocumented migrants and drugs into the United States, but said more is needed to stop America from turning into what he calls a "Narco-Trafficking Playground." Mexican President Claudia Sheinbaum says she still expects an agreement to be reached before the hefty tariffs take effect. Ms Sheinbaum says Mexico is still working to accommodate President Trump's demands, and to find compromises that also work in Mexico's interests. "We have a working group and we expect to reach an agreement. That is our approach. Issues related to fentanyl and security are also on the agenda, and as for that, progress has been made towards an agreement, always within the framework of respect for our sovereignty." But international trade expert Jacob Kirkegaard says he's less hopeful about an agreement being reached between the EU and the US. "What it shows is that Donald Trump thinks he can maybe get a deal by threatening to escalate. But I have to think, I think it will backfire. I think what he has signalled to the EU is that all the efforts that the European Commission has made to try to accommodate, try to negotiate a deal, meant nothing for Trump." These threats to the EU and Mexico the latest in the string of trade levies Trump has imposed across the globe in recent weeks. They include threats to impose 50 per cent tariffs on imports from Brazil, 25 per cent tariffs against Japan and South Korea, and 35 percent tariffs on goods from Canada. Mr Kirkegaard says for the EU and the US, retaliation and escalation is looking increasingly likely. "The EU really has no other choice. If there is no deal by October, sorry, by August 1, which I think is less likely now, then we're in a trade war and we will have to see where it ends."
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