Description: US President Donald Trump has intensified the global trade war instigated by his imposition of tariffs by announcing additional 30% tariffs on the European Union and Mexico. The US President sent letters to his respective counterparts accusing the EU of stalling the trade negotiations and failing to provide any constructive trade proposals which would conclude the issue and remove the trade deficit problem. Trump also accused Mexico of failing to suppress the cartels and the drug trade in continental America, making the region a narco – trafficking terminal. Canada was also struck by additional 35% tariffs in a letter that controversially accused the country of fueling fentanyl into the US and failing to prevent the spread of the illegal drug trade. The American President has so far secured trade deals with the UK and Vietnam and has taken a tougher stance on South Korea and Japan in their ongoing trade negotiations while extending the previous trade negotiations deadline to 01 Aug. EU’s Commission President, Ursula von der Leyen has stated that EU would withhold imposing retaliatory tariff measures and support the diplomatic resolution of the dispute. Mexico’s President Claudia Sheinbaum also refrained from criticizing Trump and stated that bilateral trade negotiations were nearing an agreement.
Impact: The escalation of the global trade war risks compromising the conventional laws of global economic trade practices and poses a significant threat to global economic stability. Bilateral trade between the EU and the US surpassed $2 trillion in 2024, making the bloc of countries one of the largest US trading partners. The additional tariffs on EU imports would significantly deteriorate the already fragile transatlantic relationship between the EU and the US and could probably affect other strategic ties excluding defense and trade. The imposition of additional tariffs on Mexico and Canada threatens the USMCA trade agreement and the provisions originating from it, further aggravating the bilateral ties the US has with Canada and Mexico. In case the 01 Aug deadline is surpassed, the effect of the tariffs would have global ramifications, causing disruptions in several key industries while affecting US strategic ties with key allied countries and regions in times of severe geopolitical turmoil.