Trump imposes hefty 30% tariffs on European Union and Mexico
In a recent development, the European Union (EU) and Mexico are responding to the 30% tariffs imposed by the Trump administration, effective from August 1.
The European Commission President, Ursula von der Leyen, has strongly criticised the tariffs, stating that they would hurt businesses, consumers, and patients on both sides of the Atlantic. The EU is working diligently to reach an agreement before the August 1 deadline, but has also made it clear that it is ready to safeguard its interests by preparing proportionate countermeasures if negotiations fail.
EU trade ministers have convened to discuss retaliatory options, reflecting the heightened tensions and the risk of a transatlantic trade conflict. Prior to this latest escalation, the EU had launched a public consultation on possible countermeasures against U.S. tariffs on automotive products, aluminium, and other sectors, covering around €95 billion in U.S. imports. Potential retaliatory tariffs could target aircraft, automobiles, medical devices, IT equipment, and industrial machinery, while also considering restrictions on exports like scrap metals and chemicals.
Economically, the threat of 30% tariffs has generated significant policy uncertainty in Europe. According to Goldman Sachs, these tariffs could reduce the eurozone GDP by up to 1.2% by the end of 2026, undermining the region’s current growth optimism and investor confidence.
Mexico, like the EU, is targeted by these tariffs due to trade deficits with the U.S. While specific details about Mexico's direct official response are not provided, historically, Mexico has sought to engage in negotiations to avoid escalation and has threatened or implemented retaliatory tariffs in past trade disputes with the U.S. Given the political and trade context, Mexico is likely pursuing diplomatic and trade policy responses to mitigate impact.
Trump's letter to Mexico cited the country's failure to deal with the flow of fentanyl from its drug cartels into the U.S. The Trump administration has been sending out new tariff rates to its trading partners in recent days, also imposing new tariff rates on such major countries as Japan, South Korea, Canada, and Brazil.
This news comes as the Trump administration has paused its "Liberation Day" tariffs for 90 days, but has since decided to send letters to trading partners that unilaterally set new tariff rates, sending out his first letters on Monday after suggesting for weeks he intended to imminently start imposing new rates.
The EU will continue working toward an agreement by August 1, but will take all necessary steps to safeguard EU interests, including the adoption of proportionate countermeasures if required. Readers can sign up to the Forbes Australia newsletter to stay updated on this developing story.
- The ongoing trade tensions between the European Union (EU) and the United States, as evidenced by the 30% tariffs imposed by the Trump administration, have not only raised concerns in the realm of business and finance, but also sparked debates in the political arena, as policy-and-legislation responses are being considered.
- Amidst the potential impact of these tariffs on the general-news front, Mexico, like the EU, is also navigating the complexities of war-and-conflicts in trade, as it prepares for possible retaliatory measures, reflecting a long-standing history of diplomatic and trade policy responses.
- In the race to safeguard national economic interests, the announcement of new tariff rates by the Trump administration, such as those imposed on Japan, South Korea, Canada, Brazil, and recent threats to Mexico, has further intensified the global business and finance landscape.
