President Trump on Saturday morning fired off two trade warning letters via Truth Social, threatening to impose 30% tariffs on all Mexican and European imports starting August 1. The warning to Mexico hinges on action to curb the flow of fentanyl and dismantle drug cartels, while the threat to Europe demands an end to long-standing trade imbalances driven by EU tariffs and non-tariff barriers. This caps off a week of letters sent to America’s top trade partners, with tariff threats used as a negotiation tool by the Trump administration to seal deals.
“Despite our strong relationship, you will recall, the United States imposed Tariffs on Mexico to deal with our Nation’s Fentanyl crisis, which is caused, in part, by Mexico’s failure to stop the Cartels, who are made up of the most despicable people who ever walked the Earth, from pouring these drugs into our country,” Trump said in the letter addressed to Mexican President Claudia Sheinbaum Pardo.
He continued, “Mexico has been helping me secure the border, BUT, what Mexico has done, is not enough. Mexico still has not stopped the Cartels who are trying to turn all of North America into a Narco-Trafficking Playground.”
Here are the key points in the letter:
-
30% tariff will apply to all Mexican imports unless action is taken.
-
Tariff waivers will be granted for companies that build or manufacture in the U.S.
-
If Mexico raises tariffs in retaliation, the U.S. will match them on top of the 30%.
-
Adjust tariffs if Mexico successfully confronts the cartels and halts fentanyl trafficking
Copy of the letter that was posted on Trump’s Truth Social:
The second letter Trump was addressed to Ursula von der Leyen, President of the European Commission, in which he informed Brussels that he would impose a 30% tariff on all EU products starting August 1, unless long-standing trade imbalances—driven by EU tariffs and non-tariff barriers—are addressed.
“The European Union, despite having one of our largest Trade Deficits with you. Nevertheless, we have decided to move forward, but only with more balanced and fair TRADE,” the president said.
He emphasized:
-
The U.S. market is open and fair, but EU practices have created an unsustainable trade deficit.
-
The 30% tariff applies separately from any sectoral tariffs and will be higher for goods transshipped to avoid it.
-
No tariffs will be applied if EU companies manufacture within the U.S.
-
The EU must allow full market access to the U.S. or face higher tariffs.
-
Retaliatory EU tariffs will be met with additional levies.
Trump warned that this trade deficit with the EU is a “major threat to our Economy and, indeed, our National Security!”
Copy of the letter that was posted on Trump’s Truth Social:
This past week, the Trump administration sent out two dozen trade warning letters to countries.
Let’s recap the week with the most important trade headlines:
In markets, crypto was the only asset class trading, with Bitcoin edging lower following the trade warning posts around 8:30 a.m. ET. Some selling pressure in BTC/USD had already emerged earlier, starting around 6:00 a.m. ET.
If no deals are reached by August 1, renewed trade tensions could roil global markets.
Loading…
