Trump Announces Increased Tariffs on EU and Mexico

In a bold move to escalate trade tensions, U.S. President Donald Trump has announced the imposition of 30% reciprocal tariffs on both the European Union (EU) and Mexico, effective from August 1. This decision marks a significant increase from the previously proposed 20% tariff on the EU and a 5 percentage point hike from the 25% tariff on Mexico announced earlier this year.

Pressure Tactics in Ongoing Negotiations

The announcement comes amid stalled negotiations between the U.S. and EU over tariff rates and non-tariff trade barriers. Trump's decision to increase the tariff rate on the EU by 10 percentage points is seen as a pressure tactic to force a favorable agreement. Similarly, the heightened tariffs on Mexico reflect ongoing concerns over drug imports into the U.S., particularly synthetic drug fentanyl.

Implications for USMCA and Future Relations

While Mexico is a signatory to the United States-Mexico-Canada Agreement (USMCA), Trump's latest tariff announcement raises questions about the future of trade relations under the agreement. The President has hinted at possible adjustments to the tariffs if Mexico intensifies its efforts to combat drug cartels and stem the flow of fentanyl into the U.S.