The Tariff Man is on track to hit hard again this summer, and its bad news for EU companies ranging from Dutch cheesemakers to industrial heavyweight Airbus.
European Commissioner for Trade Cecilia Malmström warned the EUs trade ministers at a meeting on Monday that they need to steel themselves for U.S. President Donald Trump to hit billions of euros worth of European goods with tariffs, ramping up a decadeslong dispute over unwarranted subsidies for Airbus.
Three officials in the room said Malmström warned them that the U.S. has rejected attempts to negotiate a deal on aviation subsidies and added that Washington is now willing to proceed with the tariffs, which would be legal under World Trade Organization (WTO) rules.
“We should brace for this,” the officials cited Malmström as saying.
Although the WTO ruled that not only Airbus but also its American competitor Boeing benefited from illegal state aid, the U.S. case against Airbus is more advanced. Washington said last month it wants to levy retaliatory tariffs on up to $21 billion of European products, a decision that still needs to be confirmed by a WTO arbitrator. The verdict is expected to come in July.
“I cannot see any reason to make basically the U.S. cheese aficionados pay for the aircraft battle” — Léa Vitali from the European Dairy Association
“There is a big probability that the U.S. will apply these tariffs as soon as the WTO arbitrator has ruled,” said one EU diplomat who attended Malmströms briefing. The diplomat added that the U.S. duties would likely hit the EU by the end of July or early August: “Its what this U.S. administration likes.”
An official from the Office of the U.S. Trade Representative said that Washington has stressed throughout the dispute that it is seeking a negotiated outcome. “It is our hope and expectation that the additional duties, if needed, will provide an incentive for the EU, once and for all, to stop subsidizing Airbus in ways that have adverse effects on the United States,” the official said.
The likely incoming tariffs risk further souring transatlantic trade relations, which have already deteriorated over U.S. duties on European steel and aluminum exports, a pending threat to impose hefty auto tariffs as well as a stark disagreement on the scope for bilateral trade talks. One EU official described the U.S. approach as “hit first, talk later.”
President Trump has expressed his willingness to impose the tariffs: “The World Trade Organization finds that the European Union subsidies to Airbus has adversely impacted the United States, which will now put Tariffs on $11 Billion of EU products!” he tweeted last month, adding: “The EU has taken advantage of the U.S. on trade for many years. It will soon stop!”
European Commissioner for Trade Cecilia Malmstrom | Emmanuel Dunand/AFP via Getty Images
Although the $11 billion mentioned by Trump represents the harm caused by EU subsidies, according to the Office of the U.S. Trade Representative, the list of targeted products actually covers $21 billion worth of European exports. The U.S. can choose products and then tax them at different rates in order to claw back the claimed $11 billion in damage.
Unnecessary trade tensions
Although the European Commission expects the WTO arbitrator to rule that the U.S. can only target a lower sum than requested, Brussels is nonetheless expecting a negative impact for exporters of iconic European foods such as Dutch Gouda and Edam cheese, French wine and Spanish olive oil.
“I cannot see any reason to make basically the U.S. cheese aficionados pay for the aircraft battle, since they would have to pay the higher prices for the dairy products from the EU,” said Léa Vitali from the European Dairy Association.
A large coalition of winemakers from France, Italy and Spain wrote a letter to Malmström last week, urging both sides to work together and “reduce or eliminate wine tariffs, not raise them.”
Besides food products, the U.S. tariffs also target high-value exports of European aircraft parts, which threatens the supply chaiRead More – Source