Trump intensifies trade war with threat of 30% tariffs on EU, Mexico

President Donald Trump has announced plans to impose a 30% tariff on imports from Mexico and the European Union starting August 1, following failed trade negotiations with both major U.S. partners.

The move escalates an ongoing trade dispute that has unsettled U.S. allies and markets. Trump shared the decision through letters addressed to European Commission President Ursula von der Leyen and Mexican President Claudia Sheinbaum, posted on his Truth Social platform.

In response, both the EU and Mexico condemned the tariffs as unfair and pledged to continue negotiations in hopes of reaching a broader trade agreement before the deadline. President Sheinbaum expressed optimism that a deal could still be achieved, but firmly stated that Mexico’s national sovereignty is non-negotiable.

Trump also sent similar tariff notifications to 23 other countries, including Canada, Japan, and Brazil, with rates ranging from 20% to 50%, and a separate 50% tariff specifically targeting copper imports. He clarified that the 30% tariffs would be imposed in addition to existing duties on steel, aluminum, and automobiles.

The August 1 deadline allows time for negotiations, and while Trump has previously backed down from tariff threats, this latest round signals a renewed assertive trade strategy. The administration’s earlier threats in April caused market disruptions, although implementation was postponed.

Despite record highs in the stock market and a strong U.S. economy, Trump appears determined to press ahead. Though he promised to secure numerous new trade deals during the previous tariff pause, only framework agreements with the UK, China, and Vietnam have been announced so far.

Trump’s letter to the EU called for the elimination of European tariffs on U.S. goods, citing the need to reduce the trade deficit. Von der Leyen warned that the new tariffs would disrupt critical transatlantic supply chains and said the EU is prepared to take countermeasures to protect its interests if necessary.

Mexico’s economy ministry stated it had been notified of the U.S. decision during a recent meeting and rejected the move as unjust. Notably, Mexico’s proposed 30% tariff is lower than Canada’s 35%, despite U.S. claims about cross-border fentanyl trafficking- an issue Trump referenced in his justification. U.S. data, however, shows the vast majority of fentanyl enters from Mexico, not Canada.

Free trade with the U.S. has been a key driver of Mexico’s export growth, with over 80% of Mexican goods sent to the American market. While the EU initially aimed for a full trade agreement, it has recently shifted toward a more flexible framework similar to the U.K.'s post-Brexit deal. Internal divisions persist within the EU, with Germany pushing for a swift resolution and France urging caution against yielding to U.S. pressure.

Bernd Lange, head of the European Parliament's trade committee, called for immediate countermeasures, criticising the U.S. approach as disrespectful. Analysts warned of a possible tit-for-tat escalation, drawing comparisons to the earlier U.S.-China trade conflict.

Trump’s tariffs are generating significant revenue for the U.S., with customs duties surpassing $100 billion so far this fiscal year. However, they have also caused friction with close allies. Japan’s Prime Minister Shigeru Ishiba recently stressed the need to reduce reliance on the U.S., while Canada and some European nations are reconsidering their defence relationships with Washington, including exploring alternative military procurement options.

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