US President Donald Trump has said he will put tariffs on 11 billion dollars (£8.4 billion) worth of European Union cheese, wine and other goods to retaliate for what Washington says are improper subsidies to Airbus.
The US trade representative said the World Trade Organisation (WTO) has repeatedly found that EU subsidies to the European aircraft maker have caused “adverse effects” to the US.
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Mr Trump tweeted that he “will now put Tariffs on $11 Billion of EU products! The EU has taken advantage of the U.S. on trade for many years. It will soon stop!”
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! The EU has taken advantage of the U.S. on trade for many years. It will soon stop!
— Donald J. Trump (@realDonaldTrump) April 9, 2019
A preliminary list of EU goods facing additional US duties includes everything from aircraft and aircraft parts to cheese, olives and wine.
The list was released for public comment, subject to arbitration at the WTO, with results expected this summer.
While the size of the tariffs is small compared with the hundreds of billions the US and China are taxing in their trade war, it suggests a breakdown in talks with the EU over trade at a time when the economy is already slowing sharply.
The US and EU have been negotiating since last year about how to avoid tariffs that Mr Trump has wanted to impose to reduce a trade deficit with countries such as Germany.
But experts warn that tariffs lead to higher consumer prices in countries that impose them and can hurt overall economic growth.
The US had in 2004 complained to the WTO, which sets the rules for trade and settles disputes, that the EU was providing unfair support to Airbus.
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The WTO ruled in May last year that the EU had in fact provided some illegal subsidies to Airbus, hurting US manufacturer Boeing.
The US expects the WTO will say this summer that it can take countermeasures to offset the EU subsidies.
It will now start a consultation with industry representatives on the list of EU goods it wants to tax so that it can have a ready list.
A container ship is loaded at the harbour in Hamburg, Germany (Martin Meissner/AP)
The US move, while following international trade rules, appears to reflect broader US frustration at the slow pace of talks on trade with the EU.
Mr Trump in June last year imposed tariffs of 25% on steel imports and 10% on imported aluminium from the EU in a move that seems aimed at helping the US industry but has also raised costs for many businesses that import these products.
The EU responded with tariffs on about 2.8 billion euros (£2.4 billion) worth of US steel, agricultural and other products, from Harley-Davidson bikes to orange juice.
The US and EU have been in talks since July to scale back the tariffs, with Mr Trump holding out the bigger threat of slapping tariffs on European cars – a huge industry in the region – should the negotiations not yield a result.
US officials have repeatedly expressed frustration at the slow pace of the talks.
The EU responded to the US’s latest call for new tariffs by noting that it was based on its own estimate, not anything it had been awarded by the WTO.
It also said the EU is preparing its own retaliation based on a separate WTO case, in which US-based Boeing was found to have received illegal support from the state of Washington.
It did not say how big that retaliation might be.
The US attempt to tax Airbus jets comes just as Boeing is facing broad challenges over the global grounding of its 737 Max airliners amid concerns that technical problems could have contributed to two crashes in five months.
Tariffs on European planes could, in theory, help Boeing and hurt Airbus, whose shares were down 1.7% on Tuesday on a day when stock markets were mostly higher.
The US announcement also comes as China’s prime minister meets top European Union officials to discuss thorny issues, including trade.
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