As the ongoing trade war with China nears an end, the U.S. is preparing to levy tariffs on the European Union in a move that could have a significant impact as Brussels struggles with the continuous Brexit drama.
Earlier this week, U.S. Trade Representative Robert Lighthizer proposed brand-new tariffs on $11 billion worth of European Union goods previously to counterbalance what the United States believes are forbidden subsidies given to the airplane manufacturer Airbus.
The list consists of airplane products, white wine, cheese, motorcycles, and even escargots.
The move is part of a 15-year debate traversing three presidents and four presidential terms over World Trade Organization rules dictating the way the U.S. and E.U. finance their two enormous plane makers and aerospace businesses, Boeing and Airbus.
The event, proposed first by the Bush administration, blamed the EU for furnishing prohibited aid to Airbus. Succeeding administrations then pursued the trade action over the next 14 years. Both the Obama and Trump administrations looked for a resolution of the affairs, especially an end to the EU’s subsidies to Airbus.
A WTO final ruling released in December allowed the United States to require tariffs. Per this ruling, the US has approximated the loss of the aids to be $11 billion and proposed tariffs on a similar quantity of items.
President Trump is looking to utilize the talks to slash America’s $150 billion trade shortfall with the EU, and adamantly maintains that Brussels must also open its farming market and lift trade barriers such as a ban on American hormone-treated beef.
The Trump administration’s inclusion of articles like cheese, butter and red wine on the tariff list along with jet planes feels like they’re trying to strike Europe, especially France.
A trade war is lose-lose for both Europe and the U.S.
Assuming the worst, a trade war could result in a chain of effect pointing to tariffs on the many of all item groups. If these result in an average tax of 10% on EU commodities to the United States and the EU levying an extra 10% tax on imports from the United States, this will have an adverse financial impact on both the US economy and the EU.