Trump hits the European Union (EU) with a 30% tariff, starting on August 1

Trump hits the European Union (EU) and Mexico with a 30% tariff, starting on August 1, and more if they retaliate.

• Trump announced a new round of tariffs on his Truth social media app
• 30% blanket levy on all imports from both the European Union (EU) and Mexico, effective August 1
• follows the breakdown of months-long trade negotiations, Trump failed to secure a broader trade agreement with either party.
• the EU had hoped to strike a zero-tariff deal on industrial goods, but talks faltered
• Trump’s 30% tariff is notably steeper than the 20% he previously proposed during “Liberation Day” remarks in April
• in his letter to the EU, Trump warned of even harsher measures if the bloc retaliates
• in a separate message to Mexico’s president, Trump linked the tariff to immigration policy, saying Mexico’s efforts to help secure the U.S. border had been “not enough,” despite recent cooperation

Wholesale FX markets open very early on Monday here in Asia, which will be Sunday afternoon US time. Expect a small gap up for the USD. The way this tariff mess has played out so far is Trump backs down, allowing an extension of the date until the tariff kicks in, thus allowing more time for talks. Its earned him the nick name ‘TACO’, for ‘Trump Always Chickens Out’. Let’s see if he does that this time. For traders, the welcome development is market movement and volatility out of all this. For real world, main street, business all the uncertainty is much more difficult to deal with, with capex and employment decisions often put on hold, if not reversed.