EU and Mexico face 30% U.S. tariffs as trade tensions escalate

Not long after President Trump stated on a social media message that the United States will increase tariff rates on Canada, effective, August 1, over the weekend he said that matching 30% tariffs will be placed on the imports from the European Union and Mexico to the U.S. on the same date—separate from sectoral tariffs.

Tariffs already placed by the U.S. on the EU currently include:

• a 20% tariff on EU-origin goods to the U.S.;
• a 50% tariff on aluminum and steel; and
• a 25% tariff on EU passenger vehicles and light truck imports, among others

In a letter sent by President Trump to European Commission President Ursula von der Leyen on July 11, Trump wrote that the U.S. has concluded it must move away from these long-term, large, and persistent trade deficits endangered by the EU’s tariff and non-tariff policies and trade barriers, with the relationship between the U.S. and the EU far from reciprocal.

“Starting on August 1 2025 we will charge the European Union a tariff of only 30% on EU products sent into United States, separate from all sectoral tariffs,” wrote Trump. “Goods, transshipped to evade a higher tariff will be subject to that higher tariff. Please understand that the 30% number is far less than what is needed to eliminate the trade deficit disparity we have with the EU. As you are aware, there will be no tariff if the European Union or companies within the EU decide to build or manufacture product within the United States.”

Data culled in a LinkedIn post by Dr. Jason Miller, Professor of Supply Chain Management at Michigan State University, observed that the EU accounted for $605.66 billion in imports in 2024, or roughly 18.5% of total U.S. imports, adding that the EU (collectively) is the single largest trading entity, outpacing Mexico by almost $100 billion.

“By far the largest category of imports is pharmaceuticals, followed by motor vehicles,” said Miller. “Pharmaceuticals are likely to be covered by Section 232 tariffs, and motor vehicles and motor vehicle parts are already covered by Section 232 tariffs. Some key categories that will be affected include Aerospace Products & Parts; Navigational/measuring/medical/control Instruments; Other General Purpose Machinery; Other Basic Organic Chemicals; Industrial Machinery; Electrical Equipment; Engines, Turbines & Power Transmission Equipment; Construction Machinery; Semiconductors & Other Electronic Components; (x) Perfumes, Makeups & Other Toiletries; and (xi) Wines, Brandy, And Brandy Spirits.

The greatest irony of the 30% EU tariffs is that they make the types of industrial goods needed to outfit American manufacturing plants more expensive, which is a substantial headwind on capital investment. For example, Germany is a leading producer of high-end industrial robots and machine tools, which are needed in an incredibly wide variety of applications.”

For its part, the EU said today it  is pausing retaliatory tariffs on U.S. goods that were set to take effect Monday, extending trade talks and aiming to avoid renewed transatlantic tensions.

The move comes in response to a revised proposal from President Donald Trump outlining new tariff rates and a later implementation timeline for duties on EU steel and aluminum. EU leaders say the delay allows for continued negotiations on a broader clean steel agreement.

European Commission President Ursula von der Leyen issued a sharp response to the U.S. position while affirming the EU’s willingness to negotiate.

“We take note of the letter sent by U.S. President Trump outlining a revised tariff rate and a new timeline,” von der Leyen said. “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 added that the EU has “consistently prioritized a negotiated solution with the U.S., reflecting our commitment to dialogue, stability, and a constructive transatlantic partnership.” She reiterated that talks would continue through August 1. However, von der Leyen warned that the EU “will take all necessary steps to safeguard EU interests, including the adoption of proportionate countermeasures if required.”

The dispute dates back to Section 232 tariffs introduced during Trump’s first term, which led to EU countermeasures targeting American-made whiskey, motorcycles, and other exports.

New tariffs on Mexico: In a letter to Claudia Scheinman, president of Mexico, Trump stated that the United States imposed tariffs on Mexico, the largest U.S. trading partner, to deal with the nation's Fentanyl crisis, which is caused in part by Mexico's failure to stop the cartels.

“Mexico has been helping me secure the border, BUT what Mexico has done is not enough,” said Trump. “Mexico still has not stopped the cartels who are trying to turn all of North America into a narco trafficking playground. Obviously, I cannot let that happen. Starting August 1 2025, we will charge Mexico a tariff of 30% of Mexican products sent into United States, separate from all sectoral tariffs. Gods transshipped to evade higher tariffs will be subject to that higher tariff…If for any reason you decide to raise your tariffs, then whatever the number you choose to raise them by, will be added onto the 30% that we charge.”

Tariffs already placed by the U.S. on Mexico currently include:

• a 25% tariff on goods unless they qualify under USMCA origin rules;
• a 25% import on steel and a 10% tariff on aluminum;
• a 25% tariff on autos and auto parts not meeting USMCA content or labor thresholds; and
• a 20% fentanyl tariff on non-originating goods

This most recent move by the White House essentially sets back any previous progress on the trade front that had been achieved, noted a Wall Street Journal report.

“This government feels it speaks with Trump and his cabinet members, and thinks it’s advancing in the relationship, but then the U.S. does something that takes you back to square one,” said Antonio Ocaranza, a Mexican political analyst, in the WSJ report, which added that new tariff threat comes amid rising frustration and fatigue with the Trump administration from Mexico.

As for what happens now, in regards to the next steps between the U.S. and both the EU and Mexico, is what has been happening all along, in that there will be negotiations going on in the background, according to Chris Rogers, Head of Supply Chain Research for S&P Global Market Intelligence.

“That's not just representatives of the EU or Mexico coming to see representatives of the administration,” he said. “It's also going to be representatives of large U.S. retailers going to the administration and saying there will be real world costs for this. To a certain extent, we've kind of not ignored the letters. But if you're going to move the deadline from July 9 to August 1, you've got to do something, and that's something is, this ‘one last chance’ to get a deal done. There is some sort of method there, but it is not what you would expect from negotiations.”