Donald Trump has declared that starting August 1, goods imported from both the European Union and Mexico will incur a 30% tariff rate in the United States, as stated in letters shared on his social media platform, Truth Social.
In his correspondence with Mexico’s leader, Trump recognized the country's efforts in curbing the influx of undocumented migrants and fentanyl into the U.S.
However, he expressed that Mexico has not done enough to prevent North America from becoming a "Narco-Trafficking Playground."
Trump wrote in his letter to the EU, "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. Our relationship has been, unfortunately, far from Reciprocal."
The unexpectedly high tariff rate has undermined the EU’s aspirations for de-escalation and a trade agreement. This rate significantly exceeds the 10% that was believed to have been negotiated by European trade commissioner, Maroš Šefčovič, and poses a risk of a trade war affecting low-margin goods such as Belgian chocolate, Irish butter, and Italian olive oil.
Similar to the UK agreement, the EU’s deal is merely an agreement in principle and lacks legal binding. It only covers the main points, with sources indicating that the draft presented to ambassadors during a confidential meeting on Monday was limited to just three pages.
Brussels is likely to insist on reopening negotiations, interpreting the latest threat as a tactic by Trump to gain further concessions from the EU, which he previously labeled as "nastier" than China in trade matters.
In any case, further negotiations are essential to develop a legal text that can be officially registered by the U.S. government, a process fraught with its own risks.The UK took seven weeks to have its agreement registered, which included a commitment to reduce tariffs on car exports from 27.5% to 10%, but the agreed zero tariff for the British steel industry was omitted.