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EU poised to impose $4 billion in tariffs on US goods this week

09 November 2020

The European Union is set to impose tariffs on $4 billion of US imports in retaliation for US subsidies for plane maker Boeing.

Reuters reports that European diplomats are preparing for an eleventh-hour showdown with President Trump.

A majority of EU governments have backed imposing the widely expected tariffs once EU trade ministers meet next Monday - the latest twist in a transatlantic trade saga that has spanned 16 years and four US presidents.

Though Joe Biden won the US election on 7 November, Donald Trump remains in office until 20 January and has plenty of leeway to increase US tariffs on Europe that were imposed in a parallel case over subsidies for Airbus.

US Trade Representative Robert Lighthizer last month warned any EU tariffs would "force a US response" and Trump has threatened to "strike back harder".

Brussels views its own tariffs - authorised by the World Trade Organization last month - as important leverage in negotiations to end a dispute that began in 2004.

"I would expect the tariffs to be imposed [on 10 or 11 November]," an EU diplomat said.

In October 2019, Washington imposed tariffs on Airbus planes and other European products from cheese to olives and single-malt whisky. Combined, the two cases represent the world's largest ever corporate trade dispute.

Washington argues there is no legal basis for EU tariffs because underlying subsidies to Boeing have been repealed. European officials argue it is only the WTO that can decide on compliance and that last month's green light stands.

Both sides accuse the other of failing to obey WTO rulings but are seen as determined to maximise their positions ahead of probable negotiations.

If Biden wins, the avowed transatlanticist is expected to work quickly to mend fences with Brussels on a host of issues, and could use talks over the aircraft subsidies as a gesture of goodwill as he tries to build a more united front against China.

After holding off on tariffs to avoid clashing with the US presidential campaign, EU governments formally cleared tariffs on Tuesday 3 November, Election Day, but must now decide their timing.

What this means for the farm sector

Tariffs will hit US planes and parts, fruits, nuts and other farm produce, orange juice, some spirits and other goods from construction equipment to casino tables, diplomats said.

The European Commission said it was fine tuning what it regards as its retaliation rights in case no agreed solution could be found with Washington, including an immediate suspension of US tariffs.

Lighthizer's office had no immediate comment. One senior US source said Trump was not expected to feel constraint about expanding US tariffs, even if he loses the election.

The United States is authorised to impose tariffs on $7.5 billion of European goods, but has not used the whole quota. It could raise duties on various goods or expand the target list.

European producers have voiced similar complaints about US tariffs. Politicians on both sides of the Atlantic are under mounting pressure to prevent the aircraft feud hurting other industries.

New EU tariffs will also hand Britain, which left the bloc this year, delicate decisions about whether to join neighbours in imposing tariffs at a time when it is caught between trade negotiations with both the United States and EU.

Britain, a partner of France-based Airbus, has pledged to "keep all options open".

Read more about this story here.

Source: Reuters



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