US imposes tariffs on record $10b in EU goods

French wine displayed at a Los Angeles shop this month. The Trump administration's move to impose tariffs on European Union products, including wine, kicked in just days after the US was given the formal go-ahead by the World Trade Organisation.
French wine displayed at a Los Angeles shop this month. The Trump administration's move to impose tariffs on European Union products, including wine, kicked in just days after the US was given the formal go-ahead by the World Trade Organisation.PHOTO: EPA-EFE

Civilian aircraft, wine, whiskies among those hit; Europe ready to retaliate, says minister

WASHINGTON • The United States imposed tariffs on a record US$7.5 billion (S$10.24 billion) worth of European Union goods yesterday, despite threats of retaliation, with Airbus, French wine and Scottish whiskies among the high-profile targets.

The tariffs, which took effect just after midnight in Washington (noon, Singapore time), came after talks between European officials and US trade representatives failed to win a last-minute reprieve.

The onslaught from US President Donald Trump, which is endorsed by the World Trade Organisation (WTO), comes as Washington is mired in a trade war with China and could risk destabilising the global economy further.

In the line of fire are civilian aircraft from Britain, France, Germany and Spain - the countries that formed Airbus - which will now cost 10 per cent more when imported to the United States.

But the tariffs also target consumer products such as French wine, which Mr Trump had vowed to attack in recent months. Wine from France, Spain and Germany will now face 25 per cent tariffs.

Speaking in Washington hours before the tariffs were due to come into effect, France's Economy Minister Bruno Le Maire warned that the move would have serious repercussions.

"Europe is ready to retaliate, in the framework of course of the WTO," he told reporters shortly after meeting US Treasury Secretary Steven Mnuchin on the sidelines of the International Monetary Fund annual meetings.

"These decisions would have very negative consequences both from an economic and a political point of view," he said.

Mr Le Maire was due to meet US Trade Representative Robert Lighthizer late yesterday.

He also warned the US against starting another front in its trade conflicts and again called for a negotiated solution.

Mr Le Maire said that at a time when the global economy is slowing, "I think that our responsibility is to do our best to avoid that kind of conflict".

The Europeans have long advocated negotiation over conflict and they will be able to impose tariffs next year to punish the US for subsidising Boeing.

EU officials had already offered in July to call a truce on subsidies for airplane makers, in which both sides would admit fault and agree to curtail state aid - to no avail. The two sides have been involved in a row over the subsidies for 15 years.

The tariffs kicked in just days after the US was given the formal go-ahead by the WTO.

As recently as Wednesday, Mr Trump singled out the Europeans for being unfair to the US on trade, but said his door was open to negotiate a settlement.

The Europeans fear above all that Mr Trump will impose heavy duties on imports of European cars around mid-next month.

  • 10%

    Tariff on civilian aircraft from Britain, France, Germany and Spain.

    25%

    Tariff on wine from France, Spain and Germany.

This would be a serious blow for the German automotive sector in particular, even if giants such as Volkswagen and BMW also manufacture in the US.

Mr Trump had said "our products are very hard to bring in (to Europe)", when Europeans easily import their cars into the US.

The Airbus-Boeing row is just one of several issues stoking transatlantic tensions that quickly descended into acrimony when Mr Trump took office in 2017.

Mr Trump embraced a protectionist agenda, slapping import duties on steel and aluminium from the EU and other allies, while also threatening tariffs on cars.

Trade groups in Europe such as winemakers, German tool manufacturers and whisky producers in Scotland have kept up a clamour of protest, demanding that Washington reverse tack.

The US leader and European Commission president Jean-Claude Juncker agreed in July last year to a ceasefire in the conflict and to hold trade talks that have so far led nowhere.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on October 19, 2019, with the headline 'US imposes tariffs on record $10b in EU goods'. Print Edition | Subscribe