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Jul
TRUMP ANNOUNCES 30% TARIFFS ON EU AND MEXICO, SPARKING GLOBAL TRADE TENSIONS
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CapitalTimesNews / 7 months
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- 3 min read
US President Donald Trump has announced a 30% tariff on goods from Mexico and the European Union, effective August 1, in a move that could escalate trade tensions between the US and its major trading partners. Trump detailed the planned tariffs in letters to Mexican President Claudia Sheinbaum and European Commission President Ursula von der Leyen, citing border security and trade imbalances as key reasons. In his letter to Sheinbaum, Trump acknowledged Mexico’s efforts to stem the flow of undocumented migrants and fentanyl into the US but expressed frustration that more hasn’t been done to combat narco-trafficking. “Mexico has been helping me secure the border, BUT, what Mexico has done, is not enough,” Trump wrote. Trump’s letter to the EU focused on longstanding trade grievances, particularly the US trade deficit, which he described as a national security threat. “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,” Trump wrote. The EU has responded strongly, with von der Leyen noting the bloc’s “commitment to dialogue, stability, and a constructive transatlantic partnership” while also warning of potential countermeasures. “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. European leaders, including French President Emmanuel Macron and Italian Premier Giorgia Meloni, have urged Trump to give negotiations more time, warning of the dangers of a trade war. “With European unity, it is more than ever up to the Commission to assert the Union’s determination to resolutely defend European interests,” Macron said. The tariffs could have significant implications for the global economy, particularly given the substantial trade between the US and EU. In 2022, US goods imports from the EU totaled $553 billion, with the EU’s biggest exports to the US including pharmaceuticals, cars, aircraft, chemicals, medical instruments, and wine and spirits. Lamberto Frescobaldi, president of the Union of Italian Wines trade association, warned that Trump’s move could lead to “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. The potential impact on Europe could be vast, with the value of EU-US trade in goods and services amounting to 1.7 trillion euros ($2 trillion) in 2024. Douglas Holtz-Eakin, a former Congressional Budget Office director, believes the letters are evidence that serious trade talks are not taking place, and nations are instead discussing how to minimize their exposure to the US economy and Trump. “They’re spending time talking to each other about what the future is going to look like, and we’re left out,” Holtz-Eakin said.
