President Donald Trump has reignited trade tensions on the global stage by threatening sweeping 30% tariffs on imports from the European Union and Mexico, effective August 1, unless both parties agree to revised trade terms with the United States.

Trump issued the ultimatum in a pair of public letters over the weekend, emphasizing his dissatisfaction with current trade imbalances and warning that failure to eliminate tariffs, non-tariff barriers, and market restrictions would lead to punitive duties.

Trade Shock for the EU

Trump’s announcement derailed what EU officials had hoped was a final stretch toward compromise. European Commission President Ursula von der Leyen responded with sharp criticism, calling the threat damaging to both sides and vowing to take “all necessary steps” — including countermeasures — to protect the bloc’s economic interests.

The tariff saga follows months of back-and-forth negotiations. Trump first proposed a 20% EU tariff in April, later lowered it to 10% during a 90-day truce, then raised the possibility of 50% duties before settling on the current 30% threat. The EU’s 27 ambassadors are scheduled to meet to coordinate a unified response.

Mexico Also in the Crosshairs

Trump also sent a stern letter to Mexican President Claudia Sheinbaum, crediting Mexico for helping with border control but stating that it wasn’t enough. He tied the tariffs to Mexico’s ability to combat drug cartels and stop fentanyl smuggling into the U.S.

While USMCA-compliant goods are expected to remain exempt, the 30% tariff would still apply broadly — raising concerns in industries like auto manufacturing that rely on cross-border supply chains.

Mexican Economy Minister Marcelo Ebrard labeled the move “unjust,” but confirmed that a new binational working group has been launched to seek alternative solutions before the August deadline.

Global Implications and Investor Caution

The trade announcement has rattled global markets, particularly given Trump’s broader list of targets. In recent days, similar warnings have been directed at Japan, South Korea, Indonesia, South Africa, and others.

While Trump claims flexibility — hinting that better behavior may earn nations more favorable terms — the uncertainty is roiling investor confidence and complicating global supply chains.