Trade war escalates with 30% tariffs on the EU

▲ European Commission President Ursula von der Leyen will seek an agreement before the end of the month. Photo: AFP

AFP, Reuters and Xinhua

La Jornada Newspaper, Sunday, July 13, 2025, p. 14

Washington. Donald Trump announced he will impose 30 percent tariffs on the European Union (EU) starting August 1, despite ongoing negotiations between representatives from Washington and Brussels.

This figure is higher than the 20 percent announced in April and could affect key sectors such as automobiles, medicines, aircraft, and wine.

The Republican posted separate letters on his Truth Social network detailing the new taxes for both Mexico and the European Union, just as he did recently for some twenty other countries, including Canada and Brazil.

Trump complained about the US trade deficit with the 27-nation bloc. In 2024, it had a $236 billion trade deficit with the EU, which exported $606 billion worth of goods to the world's largest economy, according to figures from the Office of the Trade Representative.

In his letter, the tycoon includes a demand that Europe eliminate its own tariffs. The European Union will allow full and open access to the United States market without any tariffs, in an attempt to reduce the massive trade deficit .

Trump left the door open to renegotiation. If they are willing to open their closed market to the United States, eliminate their customs duties, protectionist measures, and trade barriers, we will eventually consider adjustments . European leaders call for a firm response.

The tycoon's announcement sparked a strong reaction across the bloc, with officials and industry leaders demanding a firm and united response amid trade negotiations.

Imposing 30 percent tariffs would disrupt essential transatlantic supply chains , European Commission chief Ursula von der Leyen said in a statement. She said she was willing to continue working toward a deal by August 1, but did not rule out retaliation if necessary .

Bernd Lange, chairman of the European Parliament's international trade committee, said the US letter was impertinent and a slap in the face after weeks of negotiations. He urged the EU to initiate retaliatory measures on Monday, as planned, and stated that the waiting period was over .

The EU has so far refrained from responding, although it has prepared two packages of measures that could affect a total of €93 billion worth of US products.

Exposes the pharmaceutical and automotive sectors

Trump's announcement affects the bloc's countries differently. Ireland, with its pharmaceutical sector, and Germany, with its automobile and heavy industry, are the most affected. The French wine industry fears a catastrophe, and in Spain, household appliances and food will be affected.

French President Emmanuel Macron called on the bloc to categorically defend European interests .

Industries across the continent expressed concern about the consequences, particularly in sectors closely integrated with the US market. Germany's main industrial lobby group, the BDI, called the measure a warning sign and warned that it could derail the recovery and undermine innovation on both sides of the Atlantic.

Since returning to the White House in January of this year, the Republican has imposed sweeping tariffs on both allies and competitors, roiling financial markets and raising fears of a global economic recession.

▲ The United States has negotiated with China to reduce fees. Here, cars about to be shipped at the port of Nanjing. Photo by AFP

AFP

La Jornada Newspaper, Sunday, July 13, 2025, p. 14

Since Donald Trump took office on January 20, he has imposed trade tariffs on both allies and rivals, disrupting financial markets and raising fears of a global recession.

Since last Monday, the US government began informing some twenty countries of the rates it will apply to their goods starting August 1, ranging from 20 to 50 percent. Midweek, it was 50 percent for Brazil and 35 percent for Canada; on Saturday, it launched 30 percent for Mexico and the 27 countries of the European Union.

With this week's impositions, average tariffs have increased fivefold and will be the highest since 1936, according to the Yale University Budget Lab.

The minimum rate has increased

Since early April, products entering the United States have been subject to a minimum of 10 percent, as part of what Trump called reciprocal tariffs , a significant increase from the average of 2.5 percent applied through the end of 2024.

The magnate imposed tariffs ranging from 11 to 48 percent on April 2, but suspended them 24 hours later for 90 days to allow for trade negotiations. During that time, only two agreements have been signed: with the United Kingdom and Vietnam. The effective date, scheduled for July 9, was postponed to August 1.

Mexico, Canada and China

For these countries, the tariffs are not reciprocal. According to Trump, he is imposing them to encourage them to further combat fentanyl trafficking and, in the case of Canada and Mexico, to also increase their fight against immigration.

The tariffs apply only to products that do not enter the United States under the United States-Mexico-Canada Agreement (USMCA), which is a minority. Furthermore, oil and minerals are only taxed at a rate of 10 percent.

For China, the tariff was 20 percent, then 30 percent on April 2, with an additional 10 points on all products entering the United States. These rates are in addition to the tariffs already in place on several products before Trump's second term.

Beijing and Washington engaged in a spiral of retaliation that escalated by more than 100 percent before agreeing to reduce their respective tariffs: China will charge 10 percent and the United States 30 percent, at least until mid-August while a trade deal is negotiated.

In Brazil's case, Trump used tariffs as a political weapon. On Wednesday, he imposed a 50 percent tariff to protest the trial of former far-right president Jair Bolsonaro, accused of an attempted coup. Luiz Inácio Lula da Silva warned that he could retaliate with a similar tariff.

In addition to the countries, several sectors considered essential will have customs tariffs starting August 1. This is the case for steel and aluminum, with 50 percent; the automotive industry, 25 percent; and copper, 50 percent.

At the same time, the White House began the process that could lead, within months, to the implementation of targeted surcharges for lumber, pharmaceuticals, semiconductors, and critical minerals.

▲ Ricardo Olmos, at the #FinTechMéxicoFestival2025. Photo by @fintechmx

Julio Gutiérrez

La Jornada Newspaper, Sunday, July 13, 2025, p. 15

Spin, Oxxo's financial arm, gained 13 million customers in three years, and for a good portion of them, it was their first financial service. Today, its product is used by people to purchase on digital e-commerce platforms and then resell.

Ricardo Olmos, CEO of Spin, indicated in an interview with La Jornada that part of the financial firm's success is explained by having built a type of ecosystem: on the one hand, the card and app for making transfers and payments; on the other, the store, and in addition, telephone services.

Understanding the needs of the majority of the population, he explains, such as cell phone balance top-ups, cash deposits at any time of day, or providing remittance reception services without excessive fees, are also part of Spin's plan to attract the largest number of customers.

Oxxo's financial firm is now directly connected to the Interbank Electronic Payment System (SPEI), the channel through which all virtual transactions in the Mexican financial system pass. It operates with a financial technology institution license. Given its growth, the next step is to become a bank, a move announced at the end of February of this year.

"In three years, we've achieved something unthinkable, something no other financial institution has done in Mexico: bringing more than 13 million Mexicans into the financial system. More than half of them are women. In several municipalities in Mexico, we already have a penetration of more than 35 percent, especially in those without a solid financial infrastructure.

"We're making nearly 64 million transactions monthly, which means our customers trust us with more than 1,400 transactions per minute, and that fills us with pride. We're proud to not only be able to send money from one part of Mexico to another, but also remittances from the United States to Mexico ," Olmos said.

Access for all

Currently, it takes an average of 80 percent of the population five minutes to travel to an Oxxo store in Mexico. Spin's CEO mentions that the company has practically reached more than 2,400 municipalities and approximately 35 percent of the adult population has an account with us.

"We're creating a virtuous cycle where we're giving our consumers access to digital payments that are much more secure, reliable, easier, and simpler in their daily lives. Access is extremely important, especially in e-commerce."

“We have many customers who are currently making their first purchase on Temu or Shein through Spin, and they are generating a source of income by reselling several of the products after receiving their purchase.

“There's also a need to be able to top up airtime in a country with more than 114 million prepaid lines, where we conveniently purchase airtime through the app… Together with the loyalty program and Oxxo and its infrastructure, which now reaches more than 1,300 municipalities and more than 23,000 stores, we've managed to offer a unique value proposition where we break down barriers and allow people to do more with their time and money,” says Olmos.

Commonly used

Many clients, says the director of Spin, within a period of 6 months, have begun to use the application in its entirety, that is, they make transfers, deposits or cash withdrawals without realizing it , by opening their account at an Oxxo they are formalized within the financial system.

The challenge is to financially digitize the population. We face problems with education, informality, infrastructure, just to mention a few. But within that ecosystem (of Oxxo and Spin), you have perhaps the largest store in Mexico, where more than 80 million Mexicans spend their money every month. We are building on these levers to achieve the best value .

Jessika Becerra

La Jornada Newspaper, Sunday, July 13, 2025, p. 15

Employees of the Federal Telecommunications Institute (IFT) are finalizing their projects to comply with their respective delivery orders, given that the organization will be dissolved by the government decree last December, reported a source from the organization who asked not to be named.

For now, all officials are working on closing out their projects to leave everything in order with their respective delivery certificates , he commented in a query by this newspaper.

He emphasized that, according to the ninth transitory article of the new Telecommunications and Broadcasting Law, all workers must be compensated and will be terminated upon the dissolution of the IFT, which will occur when the five commissioners of the new Telecommunications Regulatory Commission (CRT) are appointed.

"I believe, then, that the new commissioners will be determined to create a new structure and invite many of the current employees to collaborate, given their extensive experience in the field ," the source said.

The IFT is one of the seven agencies that will disappear due to the publication of December 20, 2024, which reforms, adds, and repeals various provisions of the Political Constitution of the United Mexican States, regarding organizational simplification.

Guidelines to be carried out

According to the IFT's 2025 annual work program, this year the agency will issue guidelines for authorized concessionaires in emergency or disaster situations, with the goal of preventing potential damage to telecommunications network infrastructure in the event of an emergency.

In turn, the agency will issue guidelines to ensure the security of voice communications over public telecommunications networks.

These measures aim to mitigate the misuse of voice service numbering resources.

The plan also states that by 2025, the IFT's data governance framework will be completed for the use, integrity, and security of the information it holds, both in institutional systems and databases.

Since 2013, the IFT has operated as an autonomous body established as part of a constitutional reform in the areas of telecommunications and broadcasting.

The functions it had of regulating and supervising the use, exploitation, and operation of the radio spectrum, telecommunications, and broadcasting networks and services in the country will be transferred to the new Digital Transformation and Telecommunications Agency.

Other functions related to operating permits will be transferred to the new National Antimonopoly Commission, which will be a public body decentralized under the Ministry of Economy and will have legal personality and its own assets, as well as management autonomy.