EU threatened with new US tariffs on $4bn of goods

The move results of the dispute involving unfair subsidies for Airbus and Boeing

Photo: US President Donald Trump

The United States threatened on Monday to impose tariffs on $4bn in European Union goods, citing vague “additional analysis” ostensibly over the lengthy dispute involving subsidies for the world's two largest plane manufacturers. The decision though also came mere days after the bloc restarted trade in essential goods with Iran.

According to the new list, released by the US Trade Representative's Office (USTR), 89 categories of goods were added to April’s compendium of products subject to proposed import duties, which is already worth some $21bn. The new potential targets include olives, Italian and Dutch cheese, Scotch whisky, Irish whiskey, pasta, coffee and ham. The latest list also features a number of copper products and variety of other metals, claiming the additional tariffs are “in response to public comments and following initial analysis.” A public hearing is now expected to be held on 5 August to discuss the latest US proposal.

Washington and Brussels have both threatened to impose billions of dollars of tit-for-tat tariffs on planes, tractors and food in a nearly 15-year dispute at the World Trade Organization over aircraft subsidies given to US planemaker Boeing and its European rival, Airbus. Following WTO's findings that EU subsidies to aircraft manufacturer Airbus had “adverse effects” on the US, Trump initiated the trade war by imposing a 25% tariff on European steel and 10% on aluminium imports that came into effect in May 2018, as he claimed “trade wars are good”. The EU then retaliated, imposing duties on $3.4bn in American foods and beverages, as well as steel and aluminium limitations. Still, the organisation has not ruled yet on the US sanctions request. It is expected to do so over the Summer.

The USTR's new tariff proposal, however, follows not only the subsidies' dispute, but also the official launch of the Instrument in Support of Exchange (INSTEX) - a “special purpose vehicle” devised by Germany, the UK and France in order to bypass the SWIFT system of international payments and trade food and medicine with Iran. It debuted on 28 June despite disapproval from Washington, which has threatened Europe with sanctions should it defy Washington on this. While these humanitarian goods are supposedly exempt from sanctions many pharmaceutical and agricultural companies cut off trade with Iran anyway out of fear of being sanctioned.

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