US President Donald Trump’s administration plans to impose tariffs on US$7.5 billion of European imports — from gouda cheese to single-malt whiskey to large aircraft — from Oct. 18 to retaliate against illegal EU subsidies for aviation giant Airbus SE.
The latest escalation in the US administration’s tariffs would open a new chapter in the trade disputes that are depressing the world economy and heightening fears of a global recession. It comes just as the Trump administration is in the midst of trying to negotiate a resolution to its high-stakes trade spat with China.
The administration received a green light for its latest import taxes on Wednesday from the WTO, which ruled that the US could impose the tariffs as retaliation for illegal aid that the 28-country EU gave to Airbus in its competition with its US rival, Boeing Co.
Photo: AFP
The WTO announcement culminates a 15-year fight over EU subsidies for Airbus.
EU aircraft would face a 10 percent import tax, while other products on the list would be hit with 25 percent tariffs.
The administration said that it has the authority to increase the tariffs whenever it wants, or to change the products in its list.
Trump called the ruling a “big win for the United States” and said it occurred because WTO officials “want to make sure I’m happy.”
“The WTO has been much better to us since I’ve been president because they understand they can’t get away with what they’ve been getting away with for so many years, which is ripping off the United States,” Trump said at a joint White House news conference with Finnish President Sauli Niinistod.
Stock markets around the world, which were already down on concerns for the world economy, added to their losses on the news.
Wednesday’s award follows a WTO ruling in May last year that the EU had illegally helped Airbus with subsidies, but it does not end the long-running trans-Atlantic dispute over aircraft. WTO arbitrators are expected to rule next year about how much the EU can impose in tariffs following a separate decision that went against Boeing.
The EU’s top trade official had said that the bloc would prefer to reach a settlement with the US to avoid a tariff dispute, but that it would respond if Trump imposes new duties on EU products.
Italian Foreign Minister Luigi di Maio, who was meeting with US Secretary of State Mike Pompeo in Rome on Wednesday, vowed to “defend our businesses.”
Italian wine and cheeses could face an impact from US tariffs.
German Chancellor Angela Merkel said that “we have lost a matter under WTO law.”
“This means it’s not some sort of arbitrary question, but a verdict according to international law that now weighs on Airbus, one must sadly say,” she told reporters in Berlin. “We have to see how the Americans will react now.”
Rod Hunter, a partner at the law firm Baker McKenzie and a former White House economic official, said he sees three possible outcomes: The EU can end the offending subsidies to Airbus, decide to absorb the tariffs or try to reach a negotiated settlement with the Trump administration.
US Trade Representative Robert Lighthizer said in a statement: “We expect to enter into negotiations with the EU aimed at resolving this issue in a way that will benefit American workers.”
The US$7.5 billion represents a fraction of EU exports to the US, which last year amounted to US$688 billion.
Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics and a former US trade official, cast doubt on prospects for an EU-US trade deal that would ease tensions and ward off tit-for-tat tariffs, at least before next year’s US presidential election.
“Election years are bad for trade deals,” Hufbauer said.
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