US threatens to place tariffs on $4 billion worth of EU goods
The US proposes new tariffs on EU goods after a battle between Airbus and Boeing over subsidies.
Just days after the US settled a tariff war with China, the US may escalate another tariff conflict. The US could impose more tariffs on EU (European Union) imports after a subsidy dispute between two of the world’s largest airplane manufacturers: American Boeing and European Airbus.
How Boeing-Airbus dispute could lead to more US-EU tariffs
The conflict between Airbus and Boeing started in 2004. The US first filed a claim with the World Trade Organisation (WTO) alleging that Airbus received $22 million in unauthorised subsidies from the EU. The EU countered with a complaint that Boeing gained illegal subsidies from the US government.
The US Trade Representative’s office said in a statement that it‘s proposing tariffs on $4 billion worth of EU products ‘in order to enforce US rights in the World Trade Organisation (WTO) dispute against the European Union (EU) and certain EU member States regarding EU subsidies on large civil aircraft’.
The EU and Airbus respond to US tariff threat
A European Union spokesperson responded to the US in a statement.
‘The European Union remains open for discussions with the United States, provided these are without preconditions and aim at a fair outcome,’ said the spokesperson.
Airbus responded to the US Trade Representative’s office by saying the WTO should decide who wins the dispute between Airbus and Boeing.
‘This only adds to the trade tensions but in reality, does not change anything. The level of retaliation is up to the WTO to define, not the USTR [US Trade Representative] or Boeing,’ said Airbus.
How could EU tariffs affect US businesses?
The US already imposed tariffs in April on $21 billion worth of European goods, including steel and aluminum. The EU responded by placing tariffs on $3 billion worth of US products. The US also considered higher taxes on imported European cars.
Some of the products that could be impacted by new tariffs include meat, cheese, coffee, and whisky. While the US may impose tariffs to retaliate against the EU, The Distilled Spirits Council of the United States denounced the possible tariffs as potentially being harmful to US businesses.
‘These tariffs, if imposed, will have numerous unintended negative consequences on US jobs, US consumers and on US companies that export to the European Union,’ said the council in a statement.
‘US companies — from farmers, to suppliers to retailers — are already being negatively impacted by the imposition of retaliatory tariffs by key trading partners on certain US distilled spirits resulting from other trade disputes, and these additional tariffs will only inflict further harm,’ added the council.
The WTO will make a final ruling about Airbus subsidies later this year.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
See an opportunity to trade?
Go long or short on more than 17,000 markets with IG.
Trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.
Live prices on most popular markets