U.S. threatens tariffs on $11bn of European Union goods

Arturo Kim
April 10, 2019

The Office of the U.S. Trade Representative said that EU support for Airbus had caused "adverse effects" when announcing the new measures, which would target European goods including jetliners, cheese, wine and motorcycles.

The office of the US trade representative late Monday released a preliminary list of European Union goods facing additional duties that includes everything from aircraft and aircraft parts to cheese, wine and olives.

Once implemented, the proposed tariffs will pile onto existing U.S. levies on European goods, including the 25% and 10% duties on imports of steel and aluminium introduced by Trump previous year, which prompted the EU to impose over $3 billion in retaliatory tariffs on U.S. goods including bourbon whiskey, Harley-Davidson motorcycles and Florida orange juice.

The EU and the U.S. are already engaged in a trade battle which has seen extra tariffs placed on goods imported to both regions.

The US trade representative, Robert Lighthizer, said that the case had been in litigation at the World Trade Organisation for 14 years and that "the time has come for action".

"It will soon stop!" he wrote.

A Boeing spokesman said the company: "Supports the USA trade representative and his team in their ongoing efforts to level the playing field in the global aircraft marketplace".

After 14 years of legal wrangling between the US and European Union, the WTO ruled in May last year that the European Union had provided some illegal subsidies to Airbus, hurting Boeing.

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The EU has argued the Boeing has benefited from similar government support. Results are expected this summer. Trade Representative's office released on Monday a preliminary list of European Union products it would tax including a number of products in the aviation sector, including Airbus aircraft.

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It began in 2018 when the USA started slapping tariffs on the imports of steel and aluminium from a number of countries, including the EU.

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.

Aberdeen Standard Investment's head of global multi-asset strategy, Andrew Milligan, said: "Signals like this just remind people. that the strategic rivalry between the US and other countries is serious and is not going to go away".

Both sides have won partial victories in claiming Airbus and Boeing received unlawful subsidies but disagree on the amount involved and whether each has complied with earlier WTO rulings.

The U.S. tariffs proposal put pressure on shares in European makers of aircraft and aerospace suppliers, wine, cheese and luxury goods.

The action comes as US aerospace giant Boeing grapples with the fallout from two deadly crashes involving its 737 Max planes, which have been grounded globally.

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