Trump Escalates the Global Tariff War - Negotiations, Threats, and Rising Risks

As the deadline for the introduction of new U.S. punitive tariffs on August 1 approaches, President Donald Trump is in the midst of frantic trade negotiations that could have significant worldwide effects. Amid the diplomatic tug-of-war, Mexico has now managed to secure a crucial breathing space: Trump granted a 90-day extension for the negotiations. The originally looming punitive tariffs of up to 30 percent on Mexican goods will therefore not come into effect for the time being, but the existing tariffs of 25 percent will remain unchanged. Trump praised the talks with Mexico's President Claudia Sheinbaum as "very successful" and emphasized that the two sides were now understanding each other better. Sheinbaum, in turn, welcomed the delay as a "good agreement" and highlighted that both sides were now negotiating on equal footing. Nevertheless, Mexico's economy remains under pressure, as copper, aluminum, and steel are still burdened with high tariffs of 50 percent. The situation looks very different for Canada. The decision of the Canadian Prime Minister to recognize a Palestinian state significantly complicates a bilateral trade agreement, according to Trump. Trump already announced on his platform Truth Social that Canada's political position could severely strain trade negotiations with the United States.

The already tense situation between the U.S. and Brazil escalated further. Trump signed a decree imposing punitive tariffs of 50 percent against Brazil. The U.S. government argued that Brazil's domestic political decisions, in particular the criminal prosecution of former President Jair Bolsonaro, under a 1977 law constituted an economic threat. Brazilian officials, including Vice President Geraldo Alckmin and Finance Minister Fernando Haddad, sharply criticized this measure and called it unfair. Brazil's Foreign Minister Mauro Vieira stressed the independence of his country's Supreme Court and declared that Brazil would not bow to foreign pressure attempts. Europe, meanwhile, is looking with mixed feelings at the deal reached with Trump on car imports. While the European auto industry generally welcomed the agreement reached between Trump and European Commission President Ursula von der Leyen, it also warned that further negotiations were necessary since the existing and new tariffs would continue to burden the sector.

At Europe's car ports such as Zeebrugge, thousands of vehicles are already piling up, with their prices rising significantly as a result of the new tariffs. Ferrari also stated that it would maintain its recent 10 percent price increase in the American market for the time being, as long as the U.S. government did not provide final clarity on future tariff levels. The effects of the new tariffs are also hitting other sectors hard. The French cosmetics manufacturer Yon-Ka, for example, announced that the new 15 percent punitive tariffs on EU goods would lead to a hiring freeze and investment cuts. Company head Alexis Wolkowinski announced moderate price increases of three to four percent but said that this was far from sufficient to offset the increased costs. In Washington, meanwhile, the Trump administration was struggling with political fires. Treasury Secretary Scott Bessent came under criticism after he suggested that a new children's savings program by the government could represent a backdoor to the privatization of Social Security. The White House then had to clarify that it was merely a "supplement," not a replacement for Social Security. As the clock ticks toward midnight and Trump's trade strategy becomes reality, the global business climate remains tense. Negotiations and decisions made in the coming hours and days could have far-reaching consequences for the world economy.

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