Published: Wed, April 10, 2019
Finance | By Kristine Clayton

USA will ‘put tariffs on $11 billion of European Union products’

USA will ‘put tariffs on $11 billion of European Union products’

President Donald Trump says he'll put tariffs on $11 billion worth of European Union cheese, wine and other goods to retaliate for what Washington says are improper subsidies to Airbus. "You're creating chaos in the market".

The US is now negotiating a trade deal with China, but tit-for-tat tariffs imposed by the two countries have already weighed on the global economy this year.

Airbus and Boeing, backed by the European Union and the United States accordingly, are engaged in a 14-years strong trade dispute, with claims and counterclaims circling the World Trade Organization for years now.

Moody's said on Tuesday that potential USA tariffs on imported autos and parts represented a significant risk to global growth and would hinder economic momentum in Germany, Japan and Korea.

The tariff threat issued by the United States on Tuesday risks further escalation.

Normally, countries use favorable WTO rulings to compel trading partners "to give up the bad stuff they were doing" and don't actually end up imposing tariffs.

The European Commission said on Monday (18 February) that the EU will respond in a "swift and adequate manner" to the possibility that the United States may impose tariffs on European cars, following the submission of a U.S. report on whether vehicle imports represent a national security threat.

U.S. Trade Representative is proposing additional duties to be imposed on a list of EU-made products, including Airbus aircraft, to compensate $11.2 billion the U.S. allegedly loses annually.

According to an analysis by the Jefferies investment banking company cited by Business Insider, Italian beverage maker Campari Group, French alcoholic beverage maker Pernod Ricard, the UK's Fever-Tree drink co, and Dutch beer brewer Heineken face revenue losses of up to 6% as a result of the new Trump tariffs. The EU responded with tariffs on about 2.8 billion euros' worth ($3.4 billion) of US steel, agricultural and other products, from Harley Davidson bikes to orange juice.

Eric Schweitzer, the head of the Association of German Chambers of Commerce and Industry, lamented the trade tensions. "The EU is open to the US offer for dialogue in order to reach a fair solution".

Tucker, in her statement, accused Boeing of not complying with past WTO decisions.

A Commission spokesperson said it was "starting preparations so that the European Union can promptly take action based on the arbitrator's decision on retaliation rights in this case".

The WTO ruled past year that the European Union had failed to remove illegal subsidies for two aeroplane programmes, the A350 and the A380. But the ruling was limited: The state tax subsidies came to only about $100 million.

The U.S. announcement also comes just as Boeing is facing broad challenges over the global grounding of its 737 Max commercial jet amid concerns that technical problems could have contributed to two crashes in five months. These subsidies included aid for the launch of all Airbus models, causing Boeing to lose sales and market share throughout the world.

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