The Trump administration announced tariffs on a number of goods from the European Union after Wednesday’s ruling from the World Trade Organization that it could put levies on $7.5 billion worth of EU imports, launching what could turn into another trade war.
So prices on Scotch, French wine, cheese, olives, butter, yogurt, some pork products and other European exports will go up 25% after the WTO ruled Europe gives illegal subsidies to Airbus. The $7.5 billion ruling was the largest award in WTO history.
But it wasn’t all bad news as the U.S. removed leather goods from the original list of potential items to slap with tariffs, and the duties on wine and spirits weren’t as high as expected. Washington has requested a meeting with the WTO to formally authorize the tariffs, which will take effect on Oct. 18.
The Trump administration’s use of tariffs is an attempt to convince the EU to negotiate a new deal, according to a Bloomberg report.
“Finally, after 15 years of litigation, the WTO has confirmed that the United States is entitled to impose countermeasures in response to the EU’s illegal subsidies,” U.S. Trade Representative Robert Lighthizer said in a statement. “We expect to enter into negotiations with the European Union aimed at resolving this issue in a way that will benefit American workers.”
The U.S. of course is already mired in a two-year-long trade war with China, and Wednesday’s ruling now puts the EU firmly in the Trump administration’s crosshairs.
The new tariffs “would deliver a serious blow to Europe’s aircraft industry and hit export orders for U.S. manufacturers,” Bloomberg economist Maeva Cousin said. “It may also mark an escalation in a trade war with the EU, which could tip the region’s fragile economy into recession.”
The news however was good for Chicago-based U.S. plane manufacturer Boeing.
“Europe is facing tariffs today because Airbus has refused for years to comply with WTO rulings,” Boeing told Bloomberg via email. “Unfortunately, Airbus’s non-compliance will negatively impact European Member States, industries and businesses completely unrelated to Airbus’s actions, as well as Airbus’s airline customers.”