Trump says Mexico, EU to face 30% tariff from Aug 1

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WASHINGTON: President Donald Trump on Saturday (Jul 12) targeted Mexico and the European Union with steep 30 per cent tariffs, dramatically raising the stakes in already tense negotiations with two of the largest US trading partners.

Both sets of duties would take effect Aug 1, Trump said in formal letters posted to his Truth Social platform. The president cited Mexico's role in illicit drugs flowing into the United States and a trade imbalance with the EU as meriting the tariff threat.

Both partners swiftly slammed the new duties, with the EU warning they could disrupt supply chains - but insisting it would continue talks seeking an agreement with the US - while Mexico branded them an "unfair deal".
French President Emmanuel Macron expressed "very strong disapproval" of the step and called on the bloc to "resolutely defend European interests".

Since returning to the presidency in January, Trump has unleashed sweeping stop-start tariffs on allies and competitors alike, roiling financial markets and raising fears of a global economic downturn.

But his administration is coming under pressure to secure deals with trading partners after promising a flurry of agreements.

So far, US officials have only unveiled two pacts, with Britain and Vietnam, alongside temporarily lower tit-for-tat duties with China.

NOT ENOUGH

The fresh duties for Mexico announced by Trump would be higher than the 25 per cent levy he imposed on Mexican goods earlier this year, although products entering the United States under the US-Mexico-Canada Agreement (USMCA) are exempted.

"Mexico has been helping me secure the border, but, what Mexico has done, is not enough," Trump said in his letter to Mexican President Claudia Sheinbaum.

"Starting Aug 1, 2025, we will charge Mexico a Tariff of 30 per cent on Mexican products sent into the United States."

The Mexican government said it had been informed of the new threat during talks in the United States on Friday.

"We mentioned at the table that it was an unfair deal and that we did not agree," the Mexican economy and foreign ministries said in a joint statement.

The EU tariff is also markedly steeper than the 20 per cent levy Trump unveiled in April, as negotiations with the bloc continue.

"Imposing 30 per cent tariffs on EU exports would disrupt essential transatlantic supply chains, to the detriment of businesses, consumers and patients on both sides of the Atlantic," European Commission chief Ursula von der Leyen said in a statement, in reply to Trump's letter to her.

"We remain ready to continue working towards an agreement by Aug 1. At the same time, we will take all necessary steps to safeguard EU interests, including the adoption of proportionate countermeasures if required," she added.

Meanwhile, Macron backed efforts to reach an agreement that "reflects the respect that trade partners such as the European Union and the United States owe each other."

But he urged the bloc to "step up the preparation of credible countermeasures" to implement if the two sides fail to reach an agreement in time.

PRECARIOUS MOMENT

The EU, alongside dozens of other economies, had been set to see its US tariff level increase from a baseline of 10 per cent on Wednesday, but Trump pushed back the deadline to Aug 1.

Mexico and Canada come under a separate tariff regime.

Since the start of the week, Trump has sent out letters to more than 20 countries with updated tariffs for each, including a 35 per cent levy for Canada. A US official told AFP Saturday that the USMCA exemption was expected to remain for both Mexico and Canada, although the president has yet to make final decisions.

Brussels said Friday that it was ready to strike a deal with Washington to prevent the return of 20 per cent levies.

The EU has prepared retaliatory duties on US goods worth around €21 billion (US$24 billion) after Trump also slapped separate tariffs on steel and aluminium imports earlier this year, and they are suspended until Jul 14.

European officials have not made any move to extend the suspension but could do it quickly if needed.

"Despite all the movement toward a deal, this threat shows the EU is in the same camp of uncertainty as almost every other country in the world," said Josh Lipsky, chair of international economics at the Atlantic Council.

He told AFP that the path forward now depends on how the EU responds, calling it "one of the most precarious moments of the trade war so far."

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