Letter to the EU – Trump wants to impose 30 percent tariffs

Nobody knows , nobody knows.

That's been the slogan for months anyway. No one knows what this man is planning, what he'll do next, or what he'll reverse. Now, the news comes on Saturday around 9 a.m. New York time and 3 p.m. Frankfurt time: Trump says he wants to impose tariffs of 30 percent on all goods exported from the European Union to the United States , starting August 1.

The President announced via Truth Social, his own social media platform, that he had written a letter to the EU.

What's the half-life of this statement? Will it really happen, or is there still a chance to change it by August 1st? Nobody knows.

30 percent—that goes far beyond the fears in the EU. The community had hoped to negotiate a comprehensive trade agreement with Trump, a deal that would leave them with a better deal. But in recent days , it had already become clear that this would be difficult . One EU government official put it this way: "The only question is: How much dirt are you willing to swallow?"

It's becoming increasingly clear that a regulation – regardless of what happens in the next two weeks – will bring great hardship to the EU and its economies. Even tariffs of 10 percent would impose enormous costs on export-oriented industries. If the tariff were actually 30 percent, it would severely damage trade between the EU and the US.

Shortly after Trump's announcement, EU Commission President Ursula von der Leyen wrote in a statement that a tariff of this magnitude "would disrupt essential transatlantic supply chains, to the detriment of businesses, consumers, and patients on both sides of the Atlantic." The EU has always preferred a negotiated solution and remains willing to work on it until August 1. At the same time, however, von der Leyen again threatened countermeasures.

The EU Commission , which is responsible for European trade policy , said it was not surprised by Trump's announcement on Truth Social. They had been informed in advance, it was said on Saturday afternoon in Brussels. In fact, the letter that Trump published on his messaging platform on Saturday was dated the previous day - Friday, July 11th. The reaction in Brussels is rather calm. Trump's threat of a 30 percent tariff is probably primarily an attempt to increase pressure in the negotiations with the EU, several European diplomats said on Saturday. Since the tariff is not due to come into effect until August 1st, there is still time to negotiate an agreement with Trump. This should lead to lower tariffs. "Immediate retaliatory measures" from the EU are not to be expected at the moment, said a government representative in Brussels. However, "all options are certainly on the table."

Reactions from the business community are already being received. Trump's announcement is "an alarm signal for industry on both sides of the Atlantic," said Wolfgang Niedermark, a member of the executive board of the Federation of German Industries (BDI). The period until August 1 must now be used for negotiations. "An intensified trade conflict is the last thing our economies need right now," Niedermark said.

In addition to the letter to the EU, Trump also sent a letter to Mexico, in which he also announced a 30 percent import surcharge on goods from the neighboring country, effective August 1. The Mexican Ministry of Economy subsequently announced that a joint working group should find an alternative before August 1 to protect companies and workers. Mexico exports more than 80 percent of its goods to the United States.

Uncertainty weighs on the markets

At one point, Trump even threatened the EU with 50 percent tariffs . Currently, the base tariff is 10 percent on almost all imports into the US. In addition, special tariffs apply to certain products, such as steel, aluminum, and car imports. With his tariff policy, Trump wants to encourage more production in the US. It also generates additional revenue for the government. He urgently needs this revenue, because his new budget law provides for tax relief that will result in massive debt.

The 30 percent announcement is likely to trigger renewed turbulence on the stock markets early next week, even if the markets now have a bit of a lead time. However, the uncertainty triggered by the US president's back-and-forth on tariff policy has already been priced in by many traders. Because Trump repeatedly retracted some of his announcements just days later and promised negotiations, it remains unclear whether things will ultimately be as bad as feared.

However, at first glance, the situation for the EU is even worse now than it was in early April, after that memorable press conference in the White House Rose Garden when Trump, surrounded by giant Stars and Stripes flags and red tulips, signed his name in thick black marker to a decree imposing additional tariffs on virtually every country in the world. At that time, the EU was expected to pay 20 percent.

Panic spread not only in Europe. Stock markets staggered worldwide . A week later, Trump imposed a 90-day tariff pause, during which he intended to reach agreements with his trading partners. He set a deadline of July 9. A deal was also to be negotiated with the EU Commission by then. He then extended the deadline again, to August 1, for negotiations.

But this state of affairs has now changed again. The following applies: Nobody knows