*

Trump threatens to impose 30% tariffs on imports from EU

and

Mexico

*

Analysts say market complacency over trade will be tested

*

Citi strategist warns positive trade developments needed

by

August 1 to sustain market gains

*

S&P 500 ends week down 0.3%, near record highs, European

stocks

fall

(Updates with news of Trump's EU & Mexico tariffs, fresh

quotes)

By Lewis Krauskopf and Suzanne McGee

NEW YORK/LONDON, July 11 (Reuters) -

Global investors got a harsh reminder of the risks around

trade tariffs and U.S. President Donald Trump's deal-making on

Saturday after he threatened fresh tariffs on his biggest

trading partners in Europe and Mexico.

Trump said in social media posts on Saturday he would

impose a 30%

tariff

on imports from Mexico and the European Union starting on

August 1.

The announcement comes after weeks of talks with key

U.S. trading allies that failed to reach a more comprehensive

trade deal, and a week marked by heightened trade tensions after

Trump

issued new tariff announcements

for a number of other countries, including Japan, South

Korea, Canada and Brazil, as well as a 50% tariff on copper.

The European Union is the United States' largest trade and

investment partner and had hoped to reach a comprehensive trade

agreement with the U.S. for the 27-country bloc.

Three EU officials told Reuters on Saturday that Trump's

30% tariff threat is a negotiating tactic.

Michael Brown, a senior market strategist at Pepperstone

in London, said it seemed to be a "escalate to de-escalate"

strategy by Trump aimed at getting trading partners to negotiate

and extract concessions.

The EU had been facing the threat of 50% U.S. tariffs on

its steel and aluminium exports, 25% on cars and car parts and

10% on most other products. The U.S. had also been looking into

further tariffs on pharmaceuticals and semiconductors.

Brown said the risk was the European Union takes the new

tariffs poorly and announces countermeasures that escalate trade

tensions to levels in early April, when markets were whipsawed

by Trump's initial Liberation Day tariffs.

"Depending on what happens in the next 24 hours or so, I

imagine that the knee-jerk move is euro-negative, eurozone

asset-negative. And then, as calmer heads prevail, it comes back

to the fact that, is it just a negotiating gambit?," he said.

Despite some modest rockiness this week, the benchmark

S&P 500 ended down just 0.3% on the week and not far from

record-high levels.

European stocks took a slight hit on Friday as markets

waited for the promised letter on tariffs. The pan-European

STOXX 600 index lost 1% and snapped a four-day winning

streak, clocking its biggest single-day decline in over three

months.

Mexico has more to lose, given the United States is its

largest export market and the economy is already feeling the

impact of the uncertainty over trade.

U.S. stocks have rebounded after plunging in April following

Trump's "Liberation Day" announcement of sweeping global

tariffs. Trump had paused many of those steep tariffs but issued

new levies this week with an August 1 date for them to go into

effect.

The CBOE Volatility Index, Wall Street's "fear

gauge," closed on Thursday at 15.78, its lowest closing level in

nearly five months, although it moved back above 16 on Friday.

Karl Schamotta, chief market strategist with payments

company Corpay ( CPAY ) in Toronto, said the stream of tariff

announcements could reignite market concerns.

"At some point soon, it will become clear that Trump's

protectionist agenda has not been appropriately discounted in

currencies, in asset prices, or in measures of volatility."

"A moment of capitulation is coming, in financial

markets, or in the White House itself," Schamotta said.

While markets are less sensitive to headlines than a few

months ago, "we will need some positive trade developments by

the White House's August 1 deadline to hold recent equity market

gains," Citi strategist Scott Chronert said in a note on Friday.

The current weighted average tariff in the U.S. is about

16%, up from 2.5% at the start of the year, UBS economists said

on Friday. The rate would rise to about 18%, including the

country tariffs announced in this week's letters, UBS said in a

note.