【By Observer Net, Qi Qian】
On the morning of July 12 local time, U.S. President Trump announced that starting August 1, a 30% tariff rate would be imposed on imports from Mexico and the European Union.
Bloomberg reported that Trump published a letter on his self-created social media platform "Truth Social" to EU Commission President Ursula von der Leyen and Mexican President Claudia Sheinbaum regarding tariffs. This week, he has sent tariff letters to more than 20 countries and pressured trade partners to negotiate further.
"For years, we have been discussing our trade relationship with the EU and concluded that the United States must get rid of the long-term, huge, and ongoing trade deficit caused by EU tariffs, non-tariff policies, and trade barriers," Trump wrote to von der Leyen in the letter, "Unfortunately, our relationship is far from being mutually beneficial."
Trump announced that starting August 1, the U.S. will impose a 30% tariff on products imported from the EU, and said that this tariff is independent of all other industry tariffs. If EU companies decide to produce or manufacture products within the U.S., they will be exempt from tariffs.
Trump also threatened that the EU must provide full market access to the U.S. without imposing retaliatory tariffs. He said, "No matter how much you choose to raise tariffs, we will add the same amount on top of the 30%."
Bloomberg reported that Trump's trade agenda continues to catch allies off guard and injects uncertainty into global financial markets. The EU had hoped to reach a preliminary agreement with the U.S. to avoid tariffs, but Trump's letters extinguished their optimism for reaching an agreement at the last moment.
Before this, media outlets such as Bloomberg and Politico EU released news that the EU would make significant concessions in negotiations with the U.S., abandoning plans to tax American digital companies. A European diplomat recently expressed optimism to Politico EU that they would not receive similar tariff letters from Trump like those sent to Japan and South Korea before reaching an agreement.
Trump sent a letter to von der Leyen on July 12, announcing the imposition of a 30% tariff Social media
Previous report:
When initially facing Trump's tariff threats, the EU repeatedly stated it would carry out "strong retaliation." However, according to Politico EU on July 11, the EU may make even further concessions during the final stage of negotiations with the U.S.
A budget document seen by Politico EU shows that the European Commission made a complete turnaround and abandoned its plan to tax American digital companies. If the information is true, this move would be a victory for U.S. President Trump and American tech giants like Apple and Meta.
According to the report, the EU is urgently trying to reach a trade agreement with the U.S. and is anxiously waiting to see whether President Trump will further increase tariffs. Trump recently threatened that he would soon notify the EU of the new tariff rates. Before this, Trump had already sent tariff letters to more than 20 countries, including Japan (25%), South Korea (25%), and Canada (35), three U.S. allies.
"The EU is anxiously waiting"
This week, the Trump administration suddenly extended the deadline for trade partners to reach an agreement from July 9 to August 1. For the EU, if it fails to reach an agreement with the U.S. in advance, it will face almost all export goods' tariffs increasing to nearly 50%. In addition, the EU may also face potential tariffs on pharmaceutical and semiconductor industries that the U.S. is considering.
The report states that the U.S. continues to increase tariff threats against the EU. On the evening of the 10th, Trump told NBC that he would soon notify the EU of new tariff rates. "Not everyone needs to receive a letter. We are just setting our tariffs. We are saying that all remaining countries should pay tariffs, whether it is 20% or 15%. We will solve this issue now."
"I want to do it today," Trump said, "I'm talking about the EU, which is many countries you know, and Canada. We will release it in the next few hours."
Shortly after that, Trump announced that starting August 1, a 35% tariff would be imposed on goods imported from Canada.
Video screenshot of Trump meeting with Canadian Prime Minister Justin Trudeau at the G7 Summit in June
The Guardian reported that the EU and financial markets are anxiously waiting to see whether Trump will fulfill his latest threat to raise import tariffs to 15% or 20%. An anonymous EU diplomat told Politico EU on the 10th that they did not expect to receive tariff letters from Trump like those sent to Japan, South Korea, and Canada before reaching an agreement.
At noon on the 11th local time, an EU Commission spokesperson, Olof Gill, stated that the EU was ready to reach an agreement on tariff issues and planned to not schedule further meetings between both sides over the weekend. "Our primary goal is to reach a principle agreement with the U.S., and we are waiting for some signals from our U.S. counterparts that they are also prepared to do so," he added, noting that there were no signs that this would happen soon.
Trump's unpredictability has made the EU's first round of retaliatory measures toward the U.S. a focal point. The EU's tariffs on approximately 21.5 billion euros worth of U.S. goods will automatically take effect at 12:01 a.m. on the 15th local time unless the EU Commission decides to extend the current suspension.
Gill stated that the EU Commission could quickly take this step through an "emergency procedure," requiring only subsequent approval from EU member states. He said, "If we decide to extend or cancel the suspension, we can do it at any time."
The 27 EU trade ministers will discuss the current situation on the 14th, and if no agreement is reached, they will decide whether to take retaliatory measures.
Video screenshot of von der Leyen stating in April that she would "strongly retaliate" against the U.S.
180-degree turn? "EU may abolish the digital tax on the U.S."
As the EU and U.S. trade agreement negotiations entered the final stage, the EU Commission is set to publish its seven-year budget proposal starting in 2028. Politico EU saw a document on the 11th showing that the proposed tax list removed the option of a digital tax. The document listed a series of possible taxes, which may still be modified by officials before publication.
The report states that abolishing the digital tax is a major shift for the EU, as the EU had previously proposed taxing tech giants in May. This 180-degree turn may be a strategic move by the EU because it urgently wants to secure favorable trade conditions with the U.S.
It is worth noting that in June, Canada had planned to impose a digital services tax on American tech giants such as Amazon, Meta, and Apple. Subsequently, Trump criticized Canada's move as a "direct and open attack" on the U.S., halted bilateral trade talks, and threatened to impose higher tariffs. On June 29, the Canadian government announced the cancellation of the digital services tax.
The report also mentions that the issue of the EU independently raising taxes has always been sensitive, as governments of member states have been cautious about granting the EU excessive taxation and spending powers. The majority of EU funds come from contributions by national governments. However, as politicians across countries increasingly demand that Brussels tighten its finances, the EU Commission is seeking new sources of revenue.
According to the document seen on the 11th, the EU does not intend to impose a digital tax, but instead plans to propose three new taxes targeting discarded electronic equipment, tobacco products, and large companies with annual revenues exceeding 500 million euros, aiming to generate 25 to 30 billion euros in income annually. It is worth noting that tobacco products such as cigarettes and cigars are currently taxed separately by each country, with the tax revenue going to the respective countries.
According to the introduction, after the EU Commission proposes the tax proposal, the governments of the member states must reach consensus through two years of difficult negotiations.
The EU has been pushing for a principle agreement with the White House, setting a 10% benchmark tariff, and striving to gain exemptions for industries such as aviation and spirits. Solutions for car tariffs (currently 25%) are also under discussion.
Additionally, according to Bloomberg on the 12th, a source revealed that as the EU and the U.S. work over the next few days to reach a temporary trade agreement, the tariff levels on cars and agricultural products have become key points of contention between the two sides. The U.S. has proposed a 17% tariff on agricultural products, 25% on cars and parts, and 50% on steel and aluminum.
The source said that EU representatives are seeking agricultural tariffs not exceeding 10%, while focusing the negotiations on car tariffs. Some European car manufacturers have pushed for a compensation mechanism, offering tariff reductions in exchange for investments in the U.S., but the EU has not considered it due to concerns about production shifts.
These sources warned that U.S.-EU negotiations and any potential agreements depend on Trump's personal decisions and could be blocked by him.
The EU speaks tough, but...
Data shows that in 2024, the total value of goods and services trade between the EU and the U.S. reached 1.7 trillion euros, equivalent to an average of about 4.6 billion euros per day. The U.S. is the largest export market for the EU, with main exports including medicines, cars, airplanes, chemicals, medical devices, and wines and spirits. Meanwhile, the U.S. exports to the EU mainly consist of crude oil, medicines, airplanes, cars, and medical equipment.
Trump has repeatedly complained about the EU's 198 billion euro trade surplus with the U.S., accusing Europe of "taking advantage of the U.S." However, the U.S. has a trade surplus in services, which offsets the trade deficit in goods, resulting in a total bilateral deficit of around 500 billion euros.
Data shows that the U.S. has a trade deficit in goods with the EU, but a trade surplus in services Bloomberg map
Before Trump took office, the U.S. and the EU maintained a generally cooperative trade relationship with low tariff levels. The average tariff rate on U.S. goods imported from the EU was 1.47%, while the average tariff rate on EU goods imported from the U.S. was 1.35%. After Trump returned to the White House, the U.S. significantly increased tariffs on the EU.
Since Trump took office in January this year, he has frequently issued tariff threats against the EU. The EU, on the other hand, has repeatedly responded strongly. In early April, EU Commission President von der Leyen spoke in the European Parliament, vowing to implement "strong retaliation," including targeting U.S. large technology companies and other service exports, while the EU would negotiate from a position of strength.
However, while the EU made strong statements, media reports gradually revealed that the EU was preparing to make concessions on tariff issues.
Bloomberg cited a report in late March that the EU Commission had developed a "terms list" for a potential agreement, outlining areas where compromises could be made, including lowering its own tariffs on the U.S., committing to mutual investment with the U.S., and relaxing regulations and standards for U.S. companies.
According to a recent Bloomberg report, the EU is seeking to quickly finalize a preliminary trade agreement with the U.S. to lock in a 10% tariff rate and lay the groundwork for a permanent agreement. At the same time, a source told Reuters that the EU may make limited concessions on a "minimum benchmark tariff" of 10% on aircraft and parts, certain medical devices, and spirits.
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