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22nd Jan 2022

US to put tariffs on European whiskies, cheese

  • EU commission president Jean-Claude Juncker (l) managed to avert an escalation in trade disputes when meeting with US president Donald Trump in 2018 (Photo: European Commission)

The US will impose tariffs worth €6.8bn annually on European imports of whiskies, French wine, Italian cheese, and planes and plane parts in retaliation for illegal EU subsidies to airplane maker Airbus.

The new tariffs will come into force as early as 18 October, after the World Trade Organisation (WTO) ruled on Wednesday (2 October) in a 15-year-long case that the US could retaliate for the EU subsidies.

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The US plans to impose a 10 percent tariff on large civil aircraft from France, Germany, Spain and the UK.

It will also put 25 percent levies on other items including Irish and Scotch whiskies, olives, cheese, certain pork products, butter and yogurt, French wine and spirits.

There will be tariffs also on German and British camera parts, industrial microwave ovens, printed books, biscuits and waffles.

"Finally, after 15 years of litigation, the WTO has confirmed that the United States is entitled to impose countermeasures in response to the EU's illegal subsidies," US trade representative Robert Lighthizer said in a statement.

"We expect to enter into negotiations with the European Union aimed at resolving this issue in a way that will benefit American workers," he added.

The EU has said it would retaliate against the Airbus-linked tariffs, when next year the WTO is expected to rule on US subsidies to aircraft-maker Boeing.

'Short-sighted and counterproductive'

EU trade commissioner Cecilia Malmstrom said the EU is ready to work with the US on a "fair and balanced solution for our respective aircraft industries".

She added that the EU prefers to reach a negotiated settlement and that "countermeasures now would be short-sighted and counterproductive".

The legal battle over Boeing and Airbus subsidies started in 2004. Under WTO rules, the EU and US each have the right to punish the other.

The ruling by the WTO, an organisation which US president Donald Trump said he wants to leave, is testing already strained US-EU trade ties, and puts pressure on European economies as an expected economic downturn looms due partly to global trade disputes.

Transatlantic relations have deteriorated since Trump announced his "America First" approach to international ties, as Washington plans other tariffs against the EU on car parts in mid-November.

Trump has also slapped import duties on steel and aluminium from the EU and other allies, and also threatened tariffs on European cars.

Trump and EU Commission president Jean-Claude Juncker agreed in July 2018 not to escalate the trade disputes and enter into trade talks. But those talks have been stuck, as the US wants to open discussions on agricultural products which the EU refuses.

The WTO had earlier cut its trade growth forecast for this year to the weakest level in a decade, Bloomberg reported.

Incoming trade commissioner Phil Hogan said on Monday at his confirmation hearing in the European parliament that "it doesn't make sense" for the US to retaliate rather than enter into talks with the EU over the Boeing-Airbus subsidies case.

"It takes two to tango, and I'm ready to engage politically with the United States to resolve our trade differences," he said, warning that the "EU needs to stand up for itself".

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