Trump threatens Mexico and the European Union with 30% tariff, blowing up trade talks
Trump's tariff threats are prompting countries to disentangle themselves from the U.S. and buy and sell more elsewhere
President Donald Trump outside the White House. (Tasos Katopodis/Getty Images)
President Donald Trump threatened Saturday to hike tariffs on Mexico and the European Union on Aug. 1, a step that threatened to blow up ongoing trade talks with countries deeply weaved into the U.S. economy.
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The unilateral missives tracked closely with this week's barrage of letters sent to more than two dozen trading partners, from Brazil to Myanmar. Trump lambasted Mexico for not doing enough to rein in drug cartels and smuggling.
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"Mexico still has not stopped the Cartels who are trying to turn all of North America into a Narco-Trafficking Playground," he said in the letter addressed to Mexican President Claudia Sheinbaum. U.S. trade with Mexico constituted $505 billion in imports last year, making it among the largest trading partners.
Trump also attacked European Union for selling more goods to the U.S. than it imports and warned it against attempting to retaliate. “Our relationship has been, unfortunately, far from Reciprocal," Trump said in the E.U. letter.
The 27 nations of the European Union make it the biggest U.S. trade partner with $605 billion in imports, much of it pharmaceuticals, autos and aircraft. Trump also threatened earlier this week to implement a separate 200% pharmaceutical tariff that would kick in around 18 months later.
European Union Commission President Ursula von der Leyen issued a statement on Saturday saying the E.U. is prepared to retaliate with levies on their own if necessary.
"Imposing 30 percent tariffs on EU exports would disrupt essential transatlantic supply chains, to the detriment of businesses, consumers and patients on both sides of the Atlantic," she said, adding they are laboring to strike a deal to avert the tariffs. "At the same time, we will take all necessary steps to safeguard EU interests, including the adoption of proportionate countermeasures if required."
Trump's tariff threats are prompting countries to disentangle themselves from the U.S. and buy and sell more elsewhere.
In a speech earlier this week, von der Leyen said E.U. nations are striving to augment their trade with other nations so it diminishes its reliance on the U.S. "But we are also not naïve, we know the relationship with the US may not return to what it once was. That is why we are also working hard to strengthen and diversify our trading relationships with others."