(July 12): President Donald Trump unleashed his latest tariff ultimatums, declaring a 30% rate for Mexico and the European Union, as his trade agenda continues to keep allies off balance and inject uncertainty into global financial markets.
Trump made the announcement in two letters posted to social media Saturday as he informed key trading partners of new rates that will kick in on Aug 1 if they cannot negotiate better terms.
He has spent the week sending out letters to countries, tweaking his proposed tariff levels from April and inviting trading partners to negotiate further.
The EU had been hoping to conclude a tentative deal with the US to stave off the tariff, but Trump’s letter dulled optimism for an 11th-hour agreement between the major economies.
He did, however, leave an opening for additional adjustments.
“If you wish to open your heretofore closed Trading Market to the United States, and eliminate your Tariff, and Non-Tariff, Policy and Trade Barriers, we will, perhaps, consider an adjustment to this letter,” Trump wrote.
With the EU, Trump initially announced a 20% tariff in his “Liberation Day” event in early April before lowering it to 10% as part of a 90-day negotiating pause. But he quickly grew frustrated with the 27-country bloc and threatened a 50% rate, spurring more talks.
Earlier in the week, the EU said it was closing in on a framework agreement with the US after European Commission President Ursula von der Leyen spoke with Trump on Sunday.
The tariff rates would apply widely, though separate from the president’s sectoral tariffs on products such as automobiles and steel. If implemented, it could place the EU at a competitive disadvantage on American exports to the neighbouring UK, which left the bloc in 2020 and was the first country to come to a top-line trade pact with Trump.
Fentanyl fight
In his letter to Mexican President Claudia Sheinbaum, Trump said the country has been “helping me secure the border”, but added that it wasn’t enough.
Trump added that if Mexico “is successful in challenging the Cartels and stopping the flow of Fentanyl”, the US would consider adjusting the levies.
“These Tariffs may be modified, upward or downward, depending on our relationship with your Country,” he added.
The letter is silent on whether the US will preserve a carve-out for goods traded under the USMCA trade deal, which have been exempt from the current 25% rate. The administration has previously said it will keep the exemption for Canada.
Mexico is the third country to get a letter that wasn’t actually facing a tariff hike on the now-extended July 9 deadline, following Canada and Brazil.
Other countries Trump has singled out for tariffs hikes in recent day include Japan, South Korea, South Africa, Indonesia, Thailand and Cambodia, as well as Algeria, Libya, Iraq and Sri Lanka.
– The Edge
