Trump Eyes EU Tariffs Over Canada Plan

U.S. President Donald Trump on Wednesday threatened sweeping tariffs on the European Union or even a halt to trade if Brussels proceeds with plans to make Canada its first “associate member.” Calling Canada “a terrible trade partner,” Trump said that if he views the EU’s move as hostile, he would impose “very serious tariffs or stop trading with Europe on many things.” His remarks followed European Commission President Ursula von der Leyen’s announcement that the bloc was opening the door for Canada to join under a new category of associate membership, which does not currently exist under EU treaties and would require ratification by member states.

The US trade deficit widened to $88.6 billion in July 2026, marking the largest gap since March 2025, compared with a $71.1 billion shortfall in June and market expectations of a $90 billion deficit. Exports declined 2.1% to $310.7 billion, led by lower sales of crude oil (-$4.5 billion) and nonmonetary gold (-$3.9 billion). On the other hand, shipments increased for capital goods ($1.9 billion) and pharmaceutical preparations ($1 billion). Meanwhile, imports rose 2.8% to $399.3 billion, boosted by purchases of computers ($6.9 billion), computer accessories ($6.6 billion) and semiconductors ($1.2 billion) while a fall was seen for crude oil ($-1.8 billion) and charges for the use of intellectual property ($-0.5 billion). The largest gaps were recorded with Mexico ($-27.5 billion), Vietnam ($-23.3 billion) and Taiwan ($-18 billion). The deficit with China was $15.2 billion and the balance with Switzerland shifted from a surplus of $2.9 billion to a deficit of $0.6 billion.

The US trade deficit narrowed to $73.3 billion in June 2026 from $77.6 billion in May, broadly in line with market expectations, as imports declined more sharply than exports. Imports were down 1.8% to $388.0 billion, driven by lower purchases of capital goods and consumer goods, particularly computers and pharmaceuticals, while services imports edged higher. Exports fell 0.9% to $314.7 billion, reflecting weaker shipments of industrial supplies, including crude and fuel oil, and capital goods, although services exports increased on stronger financial services and travel. In the first half of 2026, the cumulative trade gap narrowed to $371.2 billion, down from a record $560.5 billion a year earlier, suggesting that US trade flows are gradually normalizing following last year's tariff announcements and the front-loading of imports that preceded them, although uncertainty over US trade policy remains.