President Trump on Saturday, July 12 announced, in letters posted on social media, his intention to impose 30% tariffs on Mexico, citing the nation's inadequate cooperation to stem the flow of illegal immigrants and drugs across the border, and the European Union, over the trade deficit that he said has been "engendered by your Tariff, and Non-Tariff, Policies, and Trade Barriers." The President also, last Thursday, said he would increase tariffs on many goods imported from Canada to 35%.

"The Mexico tariff, if it goes into effect, could replace the 25% tariffs on Mexican goods that do not comply with the existing U.S.-Mexico-Canada free trade agreement," the AP reported July 13. "Trump's letter did not address if USMCA-compliant goods would still be exempt from the Mexico tariffs after Aug. 1, as the White House said would be the case with Canada."

Politico said, "Together, the two trading partners account for about one-third U.S. imports. The United States imported $605 billion worth of goods last year from the 27 nations of the EU, whose major members include France, Germany, Spain and Italy. It imported $505 billion from Mexico, a member of the U.S.-Mexico-Canada Agreement that Trump negotiated during his first term … The U.S. trade deficit with the EU was the second highest of any trading partner in 2024 … while the deficit with Mexico was the third highest."

The announcement follows the President July 7 sending letters to 14 trading partners reiterating his intention to enact country-specific tariffs and detailing the tariff rates to go into effect as soon as August 1, in some cases updating the rates previously announced in early April. Additional letters were also sent last week. Asked on This Week about the deluge of tariff announcements from President Trump, National Economic Council Director Kevin Hassett said, "The bottom line is that he's seen some sketches of deals that had been negotiated with Howard Lutnick and the rest of the trade team, and the president thinks that the deals need to be better, and to basically put a line in the sand, he sent these letters out to folks. And we'll see how it works out."

The rates detailed in the letters posted since July 7 include:

Tax — There continues to be a focus on which industries benefited from provisions in the "One Big, Beautiful Bill Act" (Public Law No. 119-21) to extend expired and expiring tax provisions. A story in the weekend Wall Street Journal, "Private Equity Succeeded in Avoiding Major Tax Hits from Trump's Big Bill," said a carried interest tax increase was left out of the OBBBA and the industry benefited from the provision to revert to the EBITDA-based calculation for IRC Section 163(j) interest deductibility and from scrapping the IRC Section 899 retaliatory tax proposal, but, on the negative side, funds could be impacted by ending energy tax credits.

"One defeat for the private-equity lobby was its inability to snag a tax cut for investors in BDCs, which are pooled funds designed to lend money to small businesses," the story said. "A provision in the House version of the bill, which was omitted from the final version, would have given backers of these funds, who are typically wealthy people, a 23% deduction on income from their BDC investments by expanding a tax break intended for small-business owners and the self-employed."

The focus now is on regulatory implementation of energy tax credit modifications, international provisions, Trump proposals like no tax on tips and overtime, and Trump Accounts for children. Punchbowl News reported last night, "Several … tax changes are sparking attention from specific industries in particular. For example, the new tax on international cash transfers — aka the remittance tax — is another rollout to watch. The Senate narrowed the scope of this new levy, so implementation will impact a narrower set of financial services companies."

EY Alerts available related to the new law include:

• "Tax reconciliation will significantly affect individual taxpayers," available here.
• "New tax law reinvents TCJA's Opportunity Zones as new, permanent program, beginning in 2027," available here.
• "Final tax reconciliation bill expands small business stock exclusion under IRC Section 1202," available here.
• "Final tax reconciliation legislation modifies low-income housing credit," available here.
• "Final reconciliation legislation modifies provisions affecting tax-exempt entities," available here.
• "Final tax reconciliation bill makes New Markets Tax Credit permanent," available here.
• "Tax reconciliation legislation significantly affects cost recovery and accounting method provisions," available here.

Congress — The House is in session today with suspension votes on bills under the jurisdiction of the Energy and Commerce and Natural Resources committees. Later in the week are planned votes on the Department of Defense Appropriations Act (H.R. 4016) and a cryptocurrency bill, the Digital Asset Market Clarity Act (H.R. 3633), to provide for a system of regulation of the offer and sale of digital commodities by the Securities and Exchange Commission and the Commodity Futures Trading Commission.

The Senate is back in session today with a vote at 5:30 p.m. on a judicial nomination and a vote related to the nomination of Luke Pettit to be Assistant Secretary of the Treasury for Financial Institutions. Pettit was formerly a Senior Policy Advisor to Senator Bill Hagerty (R-TN).

The Senate is expected to take up a package of budget rescissions, which must be approved within 45 days of the President's proposal under the Impoundment Control Act that provides an expedited process and simple-majority threshold for passage. That means Republicans can lose three votes and have VP JD Vance break a tie. The House June 11 approved — narrowly, 214-212 — a package of budget rescissions (H.R. 4), which would claw back $9.4 billion in approved spending on programs such as the U.S. Agency for International Development (USAID), the World Health Organization, the United Nations Children's Fund (UNICEF) and the public broadcasting networks PBS and NPR. President Trump was seen as setting support for the bill as a test of loyalty, saying on social media, "It is very important that all Republicans adhere to my Recissions Bill … "

Politico reported July 9 that the Senate doesn't "have much time to negotiate: Congress has until the end of the day on July 18 to get the legislation to President Donald Trump's desk, or the rescissions request expires, forcing the administration to spend the money as Congress originally intended. And assuming the Senate does make changes, it would bounce the legislation back to the House for a final vote. Senate leaders are gambling that their counterparts across the Capitol will just swallow those revisions."

Senate Democratic Leader Chuck Schumer (D-NY) has suggested that Democratic cooperation on government funding may be withheld if Senate Republicans move forward with approval of a rescissions package.

On Wednesday, July 16 at 9 a.m., the House Ways and Means Oversight Subcommittee is holding a hearing on "Making America the Crypto Capital of the World: Ensuring Digital Asset Policy Built for the 21st Century."

Friday, July 18 at 12:00 p.m. ET is the EY Webcast, "Tax in a time of transition: legislative, economic, regulatory and IRS developments."