Brussels (Brussels Morning) The EU is planning to impose retaliatory tariffs on US$ 4 billion of US imports over subsidies for the Boeing aerospace company, according to unnamed EU diplomats, Reuters reported on Friday. A majority of EU member states have expressed support for the tariffs which EU trade ministers are to discuss later today, Monday.
The World Trade Organisation (WTO) authorised the move last month. Brussels views the tariffs as leverage that could end the dispute between the bloc and the US that dates back to 2004. US Trade Representative Robert Lighthizer warned last month that EU tariffs would force a US response, while President Donald Trump threatened to strike back harder.
The Trump administration still has time to increase US tariffs on the EU that were first put in place in response to EU subsidies for Airbus. At end of 2019, the US introduced tariffs on Airbus aircraft and other products from the EU, including cheese, olives and single-malt whiskey. An unnamed EU diplomat has predicted that the retaliatory tariffs will be imposed on Tuesday or Wednesday.
The US claims the EU has no legal basis to impose tariffs, stressing that the cited Boeing subsidies have been repealed. Meanwhile, the EU insists that only the WTO can decide on the issue, and points out that the trade organisation approved EU sanctions last month. Both sides accuse one another of violating WTO rulings and are believed to be looking to strengthen their respective positions before the start of probable negotiations.
According to unnamed diplomats, EU tariffs will target US airplanes and parts, farm produce, some strong alcoholic beverages, construction equipment and more. The European Commission has noted that it is working on the fine details of retaliatory tariffs in case no agreement can be reached with the US.
The US has been authorised to impose tariffs on some US$ 7.5 billion of EU goods, but has not used up the full quota and could therefore raise existing duties on EU goods or add items to the list. An unnamed senior US source pointed out that President Trump is unlikely to feel constraint about possible expansion of US tariffs, regardless of the outcome of the presidential election.
US Distilled Spirits Council CEO Chris Swonger warned that EU tariffs on strong alcoholic beverages would present an additional blow to the industry which has already suffered a 41-percent decline in whiskey exports to the EU in the wake of earlier EU tariffs. Producers from the EU have expressed similar concerns about US tariffs, with both EU and US politicians coming under pressure to prevent the aerospace tariff feud from spilling over to other industry sectors.