WASHINGTON (Pakistan Point News / Sputnik - 18th October, 2019) The United States is to impose tariffs on $7.5 billion worth of EU products beginning on Friday, potentially inviting retaliatory duties on its own goods, as the bloc becomes its latest trade adversary.
Unlike the United States' arbitrary tariffs in its trade row with China, the US taxes on European specialty agricultural products, such as Italian cheese, Spanish olives and French wines, are approved by the World Trade Organization (WTO).
The WTO gave its approval as a remedy to the United States and US aircraft maker Boeing, whose sales and market share it says were hurt by illegal EU subsidies towards Airbus, the European jet maker and Boeing's rival.
In April, the United States published a document that listed six pages of European products to be covered by the new tariffs.
While the WTO ruling was essentially made in response to claims brought by Boeing, it does not restrict the US tariffs from targeting industries beyond aviation.
Thus, the White House has decided on a tax hike of 10% on European aircraft and as much as 25% on agricultural products, in line with the US President Donald Trump administration's protectionist policies for the US farm sector.
This has resulted in criticism from EU dairy, spirits and produce exporters, which said they were being unfairly dragged into a trade war they had no part of. These companies, ranging from large corporations to small, family-grown businesses, say the additional taxes could have a crippling effect, particularly when economic growth was stuttering in both the bloc and across the world.
The US tariffs also do not seem to evenly penalize the countries that had benefited from the Airbus subsidies. Spain, France, Germany and the United Kingdom jointly own the aircraft maker but the tariffs on olives, for instance, are only aimed at Madrid. This has raised complaints from Spanish producers that competing exporters of European olives will benefit from Madrid's loss.
The Spanish agricultural association, COAG, says estimated losses from the US tariffs could come in at over $1 billion a year. The United States is Spain's biggest agricultural export market outside Europe and accounts for a bulk of its olive, wine, vegetable oil and cheese sales.
Spain has warned that it might request the European Commission to invoke WTO-authorized countermeasures against 4 billion Euros ($4.4 billion) worth of US goods as part of the US-EU battle over subsidies granted to the aircraft manufacturers. In addition, the association intends to ask the bloc for measures of support for the agricultural sector, in particular, for olive oil producers.
Yet, there are speculations that the European Union could have its own chance to hit back at the Americans when the world trade body rules next on Airbus' claims that it was disadvantaged too by illegal US subsidies for Boeing.
TRUMP WARNS AGAINST RESPONSE MEASURES
Meanwhile, Trump has warned European nations against mulling a counter-strike.
"There should be no retaliation, this [WTO ruling] was getting us even," the president said.
With the latest US data suggesting the country's economic growth might be slowing over a broader trade war with China, some analysts have warned that the EU-directed tariffs could bring more stress to domestic businesses, particularly as the year-end holiday season approaches.
Some also believe that by choosing to target everyday food items, including European dairy and spirits that command premium prices, the Trump administration is betting that the tariffs' impact on the US economy would be minimal from people shopping at high-end grocers.
