- President Trump says goods from the EU and Mexico will be subject to 30 % tariffs.
- Trump wrote on Truth Social that the new tariffs would come into force on August 1.
- EU’s trade commissioner claims rate would make EU-US trade “almost impossible.”
Carmakers on both sides of the Atlantic are scrambling after a sudden announcement that threatens to upend international trade. A new 30 percent tariff on goods imported to the U.S. from Mexico and the European Union is set to take effect on August 1, according to President Trump.
Related: Mercedes Sales Drop After Getting Slammed Twice By Trump’s Tariffs
The announcement came Saturday via Trump’s Truth Social account, following weeks of stalled trade negotiations between the three parties.
Trade Tensions Hit European Carmakers Hard
The 30 percent rate would “practically prohibit” trade between Europe and the US, making it “almost impossible to continue,” the EU’s trade commissioner, Maros Sefcovic, said in comments published by The Guardian.
Sefcovic believed the EU and US had come close to striking an agreement, which the European countries hoped would be on a par with the 10 percent rate the UK pays (though only on the first 100,000 imported cars) after finalizing a deal with Trump.
Even that 10 percent levy was going to be hard to swallow. European carmakers had been used to paying just 2.5 percent, and are currently paying 25 percent on top of that, but a 30 percent rate would be a real serious blow.
In a letter to European Commission President Ursula von der Leyen, Trump demanded the EU “allow complete, open market access to the United States, with no tariff being charged to us, in an attempt to reduce the large trade deficit.”
Meanwhile, Mexico is also trying to get its head around being hit with the same rate. Like the EU, Mexico is home to many car plants – some owned by US-based companies – that export vehicles to the US. Some of those Mexico-built cars, such as the Nissan Sentra, were already reportedly under consideration for a production move to America before Trump dropped his latest tariff bombshell.
Trump claims Mexico has not done enough to stem the flow of fentanyl heading north across the border.
Mexico Reacts, Canada Feels the Heat Too
The knowledge that Canada has been hit by an even more harmful 35 percent tariff rate won’t come as much comfort to the Mexican businesses that rely on trade with the US and help make the country America’s single biggest single trading partner.
Both the EU and Mexico still have two weeks to come to a deal with the US and avoid the new tariffs, but whether the sides can come to a deal that leaves everyone feeling satisfied remains to be seen.
