It appears there is no clear winner in the trade war between the U.S. and China. While both countries have experienced economic drawbacks, neither has achieved a decisive victory. The U.S. has seen increased costs for consumers and potential losses in real income due to tariffs. China has also faced economic challenges, including disruptions to supply chains and potential impacts on its clean energy transition. Ultimately, the trade war has negatively impacted both economies, with no clear victor emerging. It seems that industry is moved from China to Mexico and other such countries. Fake friends like Mexico and EU should be contained too.
“The U.S. will charge a 30% tariff on goods from the European Union and Mexico effective Aug. 1, President Trump said in letters to the leaders of each trading partner posted on Truth Social.
The letters are the latest missives in Trump's global trade wars, upping the ante in intensive negotiations aimed at lowering the tariffs before the first of next month.
Trump has made U.S. trade deficits a focus of the letters. He said he would consider lowering the tariffs if the EU offers "complete, open Market Access to the United States, with no Tariff being charged to us," and if Mexico does more to combat drug cartels, which he said are trying to turn "all of North America into a Narco-Trafficking Playground."
The new 30% tariffs would replace Trump's existing 10% blanket tariffs on most goods from the EU. He has previously threatened levies of 20% and 50% against the bloc.
The new tariffs also would replace the 25% tariff on Mexican goods that don't comply with the U.S.-Mexico-Canada free-trade agreement.
It remains unclear if USMCA-compliant goods would still be exempt from the Mexico tariffs after Aug. 1, as the White House has said would be the case with Canada. Trump threatened Canada with a tariff hike earlier last week. The White House didn't reply to a request for comment.
The tariffs would hit products from two of the U.S.'s largest and most important trading partners. Taken together, the 27-nation EU is the U.S.'s largest trading partner, with $975.9 billion in two-way goods trade in 2024, according to the U.S. Trade Representative's office. On a nation-by-nation basis, Mexico is the U.S.'s largest trading partner, with nearly $840 billion in two-way goods trade in 2024.
Trump's threat to put a 30% tariff on the EU comes after weeks of intense negotiations between U.S. and EU officials aimed at reaching an outline agreement on trade. It wasn't immediately clear how the letter might affect the status of those talks, which EU officials had said they aimed to conclude before Aug. 1.
A delegation of senior Mexican officials led by Economy Minister Marcelo Ebrard is in Washington for another round of trade talks and bilateral discussions with the Trump administration. Ebrard said on X that his delegation was notified of the letter on Friday. "We said in the working group that it was unfair and that we disagreed," he said. "Mexico is already negotiating."
Mexico -- which provides goods ranging from beer and tequila to cars and flat-screen TVs -- has backtracked from initial plans to impose retaliatory tariffs in part because of the damage that such measures could inflict on Mexico's export-led economy.
Mexico President Claudia Sheinbaum has been pushing for a framework bilateral agreement on trade, security and migration to bridge the differences, which often rock ties between two countries sharing the world's busiest border. The desire for an agreement was seen as a sign of Mexico's frustration and fatigue with the Trump administration, according to senior Mexican officials.
The most explosive bilateral issue has been security. The constant threat that an impatient U.S. might take unilateral military action against the country's powerful criminal groups keeps Mexican officials up at night, according to people familiar with the bilateral discussions.
Sheinbaum's administration has worked to address U.S. demands, including the deployment of 10,000 troops to the border to stop migrants from entering the U.S. She has boosted enforcement efforts, dismantling drug labs, capturing hundreds of suspected cartel members and expelling 29 imprisoned drug bosses to the U.S. Her government has extracted minor concessions from the Trump administration.
European Commission President Ursula von der Leyen, who leads the bloc's executive body, said the EU is ready to keep working to reach a deal with the U.S. by Aug. 1 and has consistently given priority to a negotiated solution. "At the same time, we will take all necessary steps to safeguard EU interests, including the adoption of proportionate countermeasures if required," she said Saturday.
The EU has some retaliatory tariffs ready to use if it decides that is necessary. EU member states earlier approved a package of tariffs that would target 21 billion euros worth of U.S. imports, equivalent to about $25 billion, although those tariffs have been on hold during negotiations. The EU also proposed a separate package that it said could target up to 95 billion euros worth of U.S. imports.
European officials have been frustrated by Trump's focus on the U.S. goods trade deficit with the EU. They say it reflects structural differences between the two economies and isn't the result of trade barriers, and doesn't take into account the surplus the U.S. has in services trade.” [1]
1. U.S. News: Trump Warns of 30% Levies on EU, Mexico --- President sets Aug. 1 deadline as he seeks new deals with two big trading partners. Bade, Gavin; Kim Mackrael; Perez, Santiago. Wall Street Journal, Eastern edition; New York, N.Y.. 14 July 2025: A2.
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