US President Donald Trump has warned the European Union and Mexico that they must offer better trade deals or face new import taxes. He said on Saturday that starting August 1, the US would impose a 30% tariff on most goods from the EU and Mexico unless they improve their trade offers. Trump gave the countries less than three weeks to finalise a new deal to avoid the tariffs.

Trump’s message will put pressure on America’s trading partners, many of whom are still trying to negotiate fair trade terms. His top economic adviser, Kevin Hassett, said on Sunday that the current offers made by other countries are not enough.

“The president thinks that deals need to be better,” Hassett said in an interview with ABC’s This Week. “To basically put a line in the sand, he sent these letters out to folks, and we’ll see how it works out.”

EU CHOOSES TALKS OVER IMMEDIATE RETALIATION

In response, the European Union said on Sunday that it will not immediately respond with its own tariffs, but will extend its pause on countermeasures until early August. The EU is still hoping for a negotiated agreement instead of starting a trade war.

Ursula von der Leyen, president of the European Commission, said the EU’s goal remains a peaceful solution. “We have always been very clear that we prefer a negotiated solution. This remains the case, and we will use the time that we have now,” von der Leyen told reporters.

She also confirmed that the EU will extend the suspension of its planned tariffs, which were originally set to expire on Monday.

The European Commission is trying to avoid a worsening trade conflict, even though it has prepared a list of US goods worth billions of euros that could face tariffs if talks break down.

German Chancellor Friedrich Merz said on Sunday that he supports peaceful talks and will work closely with von der Leyen and French President Emmanuel Macron in the next few weeks to find a solution.

“If that (30% tariff) were to happen, we would have to postpone large parts of our economic policy efforts because it would interfere with everything and hit the German export industry to the core,” Merz said in an interview on German public TV.

EUROPEAN LEADERS SPLIT ON HOW TO HANDLE TRUMP

Not all EU leaders agree on how patient the bloc should be. French President Macron said the EU should take a tougher stand to protect its economy and jobs. He called on the European Commission to be more firm and to consider using tools like the Anti-Coercion Instrument, which lets the EU hit back when a country tries to pressure it economically.

“The Commission needs more than ever to assert the Union’s determination to defend European interests resolutely,” Macron said.

German Finance Minister Lars Klingbeil also warned that if the talks fail, the EU must be ready to act.

“If a fair negotiated solution does not succeed, then we must take decisive countermeasures to protect jobs and companies in Europe,” Klingbeil told the Sueddeutsche Zeitung newspaper.

The EU already has two sets of possible tariffs prepared:

• One targets 21 billion euros of US goods in response to earlier steel and aluminium tariffs. That plan was suspended for 90 days starting in April.
• A second package, created in May, could hit 72 billion euros of US goods. This second list is still secret and needs approval from EU member states.

Von der Leyen said the EU’s Anti-Coercion Instrument is not being used yet.

“The instrument is created for extraordinary situations, we are not there yet,” she said.

But she explained that it gives the EU the power to respond if foreign countries use economic threats. Possible actions could include limiting market access or blocking certain investments.

The EU is also moving ahead with other trade partnerships. Von der Leyen said a political deal with Indonesia has been reached, showing the bloc’s effort to diversify trade ties.

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With inputs from Reuters