Oil markets didn’t wait for August. They moved the moment Trump posted the letters. On July 12, 2025, President Trump announced 30% tariffs on all imports from the European Union and Mexico, effective August 1. The letters were posted publicly. No backchannel. No ambiguity. The EU and Mexico combined account for roughly one-third of total U.S. goods imports. The announcement hit energy futures immediately. Brent crude rose 0.16% to $70.79. West Texas Intermediate climbed 0.58% to $68.85. Traders are pricing in retaliation, supply chain rerouting, and demand distortions.
The EU responded with a delay. Their planned countermeasures on $24.5 billion worth of U.S. exports were pushed back to allow more negotiation. Ursula von der Leyen said the bloc would “safeguard EU interests” if needed. Mexico called the move “unfair treatment” but confirmed a working group had been formed with U.S. officials. Trump’s letter to President Sheinbaum accused Mexico of failing to stop fentanyl trafficking and warned of further escalation. The EU letter cited national security risks tied to trade deficits.
The tariffs are part of a broader campaign. Trump has issued letters to 24 countries and the entire EU. Canada is facing a 35% rate. Brazil is under a 50% penalty. Vietnam negotiated down to 20%. The administration says these are reciprocal tariffs. If a country retaliates, Trump will match the increase. If they comply, rates may drop. The base rate remains 10% globally.
Markets are now watching the next shoe. The Senate’s Sanctioning Russia Act of 2025 is gaining traction. It proposes 500% tariffs on imports from countries that continue buying Russian energy. That includes China and India, which together account for 70% of Russia’s oil exports. Senator Lindsey Graham says the bill has 84 co-sponsors. Trump has endorsed it. He told Graham to “move the bill” after the July recess. The legislation includes secondary sanctions and waivers, but Trump wants full discretion. He’s pushing to remove congressional veto power and expand the waiver scope.
India imported 2.2 million barrels per day of Russian crude in June. That’s the highest level in two years. China’s intake remains steady at 1.8 million barrels per day. If the bill passes and Trump enforces it, both countries could face a 500% tariff on all exports to the U.S. unless they cut off Russian energy purchases. That would hit pharmaceuticals, electronics, textiles, and automotive parts. It would also fracture trade ties built over decades.
The energy sector is already reacting. Copper tariffs are set to match steel and aluminum at 50% starting August 1. That includes materials used in power grids, defense systems, and data centers. Oil prices are rising not because of scarcity, but because of uncertainty. The threat of 500% tariffs is enough to shift global flows. The U.S. is signaling it will penalize not just Russia, but anyone who keeps buying from it.
Sources
https://www.politico.com/news/2025/07/12/trump-european-union-mexico-tariffs-00449916