Perhaps that’s why, on Saturday, Donald Trump made a very big pivot. Beginning August 1, the new 30% tariff will be implemented on all goods imported from the European Union (EU) and Mexico. This giant step is the unequivocal centralization of a drastic escalation in the unfolding trade war chronology between the United States and its major economic partners. This was separate from a series of letters that Trump sent to EU and Mexican leaders. In them, he detailed his grand plans of introducing tariffs and venting his anger over European trade practices, predominantly in relation to U.S. technology companies.
Earlier this week, President Trump tweeted announcements about changes in tariff rates. He added that comparable rates should be expected for other large economies such as Japan, South Korea and Brazil. Above all, he emphasized that these new rates wouldn’t be coming into effect until August 1. Well, that provides us an opportunity to negotiate things before they come into effect.
During his presidency, Trump acknowledged Mexico’s collaboration in combating the surge of undocumented migrants and fentanyl pouring into the U.S. He labored the country for not taking sufficient actions to prevent North America from turning into a “Narco-Trafficking Playground.” This contrast complexifies the already-complex realities of the U.S.-Mexico bilateral relationship as trade and immigration have increasingly converged.
In each of his letters, Trump railed against what he sees as the EU’s predatory and mercantilist trade practices. In fact, he described the entire bloc as “trade more nasty” than China. He used the letter to call down attention from world leaders. Overall, Trump’s approach has caused concern among international economists and political analysts alike, due to its power to produce distrust in global relationships.
Douglas Holtz-Eakin, a former Congressional Budget Office director, commented on Trump’s recent communication strategy, stating, “They’re spending time talking to each other about what the future is going to look like, and we’re left out.” He added that Trump’s letters indicate no serious trade negotiations have taken place in the past three months.
“In the end, these are letters to other countries about taxes he’s going to levy on his citizens.” – Douglas Holtz-Eakin
The UK just completed a long process to reach an interim trade deal with the U.S. It took seven weeks of public negotiations to even get a promise of a shared commitment to lower tariffs on car exports. Though the coterminous zero tariff for British steel was indeed agreed, it was missing from the final memorandum of understanding. This mess highlights the challenges of negotiating trade agreements under Trump’s art of the deal strategy.
Ursula von der Leyen, President of the European Commission, expressed fears about the possible effects of Trump’s tariffs. She warned that such actions could “disrupt transatlantic supply chains, to the detriment of businesses, consumers, and patients on both sides of the Atlantic.” Von der Leyen reaffirmed the EU’s commitment to safeguarding its interests and indicated readiness to adopt “proportionate countermeasures if required.”
“We remain ready to continue working towards an agreement by August 1. At the same time, we will take all necessary steps to safeguard EU interests.” – Ursula von der Leyen
Trump’s recent announcements have similarly caused uproar from foreign leaders. Giorgia Meloni, Italy’s prime minister, called for “goodwill … to reach a fair agreement that can strengthen the west as a whole,” emphasizing the importance of avoiding a trade war between the U.S. and Europe.
Luiz Inácio Lula da Silva, Brazil’s president, criticized Trump’s communication style, suggesting it reflected a “complete lack of respect.” In the examples he discussed, Trump could have done a better job of communicating personally instead of sending out announcements about tariffs via Twitter.
“Trump could’ve called, but instead posted the tariff news on his website – a complete lack of respect which is typical of his behavior towards everyone.” – Luiz Inácio Lula da Silva
Trump’s new trade gambits seem designed to leverage more concessions from his foreign adversaries. He’s been outspoken in his dismay about the steady frequent trade deficits between the U.S. and the EU. Moreover, he points to non-tariff policies as barriers to improving these relations.
“We have had years to discuss our Trading Relationship with The European Union, and we have concluded we must move away from these long-term, large, and persistent Trade Deficits.” – Donald Trump
These impending tariffs represent a significant watershed moment in the customs relationship. They have power to set the terms of economic debate for decades to come. As negotiations ramp up with an August deadline approaching, stakeholders for both advocates and opponents are grappling with anxiety over what future engagement will look like and what the economic implications could be.