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New tariffs set to hit EU and Mexico from August 1
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Trump warns against retaliation as global markets react
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EU weighs countermeasures amid fears of economic fallout
President Donald Trump has announced sweeping 30% tariffs on imports from the European Union and Mexico, raising tensions in global trade and shattering hopes for compromise deals with America’s key partners.
In letters posted on social media Saturday, Trump said the tariffs would take effect on August 1, warning that any retaliatory measures would attract even higher levies. “If you raise tariffs, we’ll add the same percentage to the 30% already imposed,” Trump wrote.
The move comes after months of negotiations between US and EU officials aimed at preventing steep trade barriers. European policymakers had anticipated a 10% tariff and sought exemptions for critical industries like automobiles and pharmaceuticals.
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The European Commission had paused retaliatory plans worth €21 billion ($25 billion) in imports to allow dialogue. But Trump’s escalation may leave the EU with no choice but to proceed. “We don’t want to retaliate, but this could trigger a trade war,” warned Kaja Kallas, the EU’s top diplomat.
Mexico, which shares a trade pact with the US under the USMCA, is also hit by the tariffs, echoing earlier disputes with Canada over steel and aluminum. Analysts fear the tariffs could disrupt supply chains and drive up prices for American consumers.
At stake is a $1 trillion annual trade relationship between the US and EU, the world’s third-largest economy. “This isn’t just posturing anymore. It’s a direct shot at global economic stability,” said Jacob Funk Kirkegaard, senior fellow at Bruegel, a Brussels-based think tank.
The EU now faces a critical choice: escalate or absorb the hit. The bloc’s retaliation, if activated, could begin at 12:01 a.m. Tuesday, targeting US goods from whiskey to Harley-Davidson motorcycles.
Trump defended the move as essential to reduce America’s trade deficit, calling it “a major threat to our economy and national security.”
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European leaders warn that further escalation could inflict long-term damage on transatlantic ties. “We know the relationship with the US may never return to what it once was,” European Commission President Ursula von der Leyen admitted earlier this week.
The announcement has rattled global markets, with investors bracing for possible chain reactions from China and other trading partners. Economists warn of higher costs for goods and potential job losses across sectors.
