Trump Announces 30% Tariffs on EU and Mexico

Trade tensions escalate as new levies threaten economic upheaval.

In a move poised to ignite significant trade friction, **President Donald Trump** declared the imposition of 30% tariffs on goods from the European Union and Mexico, set to commence on August 1. The announcement has raised alarms about potential disruptions between the United States and two of its primary trade partners.

Tariffs as Campaign Foundation

**Trump** communicated these tariff plans via letters posted on social media, marking a central theme of his 2024 campaign. The president stated these measures aim to revitalize the U.S. economy, which he believes has been exploited by other nations for decades.

Addressing **President Claudia Sheinbaum** of Mexico, **Trump** acknowledged Mexico’s assistance in curbing undocumented migration and fentanyl flow into the U.S. However, he insisted that Mexico has not done enough to prevent North America from becoming a “Narco-Trafficking Playground.”

“Mexico has been helping me secure the border, BUT, what Mexico has done, is not enough,” **Trump** stated.

In his letter to the EU, **Trump** described the U.S. trade deficit as a national security concern.

“We have had years to discuss our Trading Relationship with The European Union, and we have concluded we must move away from these long-term, large, and persistent, Trade Deficits, engendered by your Tariff, and Non-Tariff, Policies, and Trade Barriers,” he wrote, adding, “Our relationship has been, unfortunately, far from Reciprocal.”

EU and Mexico Respond

**Ursula von der Leyen**, president of the European Commission, affirmed the EU’s “commitment to dialogue, stability, and a constructive transatlantic partnership.”

“At the same time, we will take all necessary steps to safeguard EU interests, including the adoption of proportionate countermeasures if required,” **von der Leyen** said.

**Von der Leyen** noted the EU remains committed to negotiations with the U.S. before August 1. EU trade ministers are scheduled to meet on Monday to address trade relations with both the U.S. and China.

**President Emmanuel Macron** of France stated, “With European unity, it is more than ever up to the Commission to assert the Union’s determination to resolutely defend European interests,” in a post on X.

**Giorgia Meloni’s** office, the Italian Premier, said “it would make no sense to trigger a trade war between the two sides of the Atlantic.”

**Lars Løkke Rasmussen**, the Danish Foreign Minister, described **Trump’s** approach as a “pointless and a very short-sighted approach.”

**Ulf Kristersson**, Sweden’s Prime Minister, warned that “everyone loses out from an escalated trade conflict, and it will be US consumers who pay the highest price.”

The Mexican government reported that U.S. State Department officials had informed them of **Trump’s** letter during high-level talks on Friday. A statement from the Mexican government said its delegation communicated its disagreement and deemed the tariffs “unfair treatment.”

Potential Economic Repercussions

The Peterson Institute for International Economics estimates that the average U.S. household could lose over $1,300 per year due to increased import costs resulting from tariffs (PIIE 2024).

If implemented, these tariffs could significantly impact the European economy. The total value of EU-US trade in goods and services reached 1.7 trillion euros (NZ$3.3 trillion) in 2024, averaging 4.6 billion euros daily, according to Eurostat.

The EU’s primary exports to the U.S. include pharmaceuticals, cars, aircraft, chemicals, medical instruments, and wine and spirits. **Lamberto Frescobaldi**, president of the Union of Italian Wines trade association, cautioned that **Trump’s** action might result in “a virtual embargo” of Italian wine.

“A single letter was enough to write the darkest chapter in relations between two historic Western allies,” **Frescobaldi** said. “At this point, our fate and that of hundreds of thousands of jobs are tied to the extra time, which will be crucial, because it is unthinkable to be able to sell these volumes of wine elsewhere in the short term.”

**Trump** has voiced concerns about the EU’s 198 billion-euro trade surplus in goods, reflecting higher American consumption of European products than vice versa.

However, U.S. companies counterbalance this with surplus in services like cloud computing, travel bookings, and legal and financial services. The U.S. services surplus reduces the nation’s trade deficit with the EU to 50 billion euros (NZ$97 billion), which represents less than 3% of overall US-EU trade.