On Thursday, President Trump made a big move. The European Union and Mexico, two of America’s closest allies, are in danger of facing tariffs as high as 30% on their goods imported to the United States. This measure will not come into force until August 1. It will represent a radical change in America’s trade relations with these two important partners.
The announcement was made alongside a press conference where Trump reiterated the need for more fair and equitable trade practices. He argued that the tariffs are necessary to protect American industries and workers from what he sees as unfair competition. These tariffs, as they’ve been used, would apply to a wide array of goods. Accordingly, U.S. consumer prices will likely increase.
To further escalate things, Trump just sent an ominous ultimatum to each of his two adversarial trading partners. And he made his opposition known early and unambiguously. If the European Union or Mexico follows through with retaliation against the tariffs, then he’ll impose higher import taxes. This rhetoric is just the latest iteration of Trump’s strategy to force a re-negotiation of trade deals he deems unfair to American interests.
The announcement has garnered praise and skepticism from economists and business leaders alike. However, as Fortune recently reported, many experts are warning that such tariffs would increase costs for American consumers and could disrupt established supply chains. Still others contend that the tariffs will put enough pressure on foreign governments to force them to negotiate more favorable trade deals with the U.S.
Trump’s trade policy writ large—indeed the very rationale for imposing these tariffs in the first place—makes the opposite clear. This policy has had far-reaching impact across countries, especially in China. This strategy is intended to use the U.S. economic might to return the type of trade deals that Trump has more often called “fairer”.