The prices of Scotch, French wine, cheese and other European exports is about to go up in the United States: On Wednesday, the Trump administration announced new tariffs on billions of dollars’ worth of goods from the European Union.
President Trump got the go-ahead from the World Trade Organization earlier in the day to impose tariffs on as much as $7.5 billion worth of European exports annually in retaliation for illegal government aid to airplane maker Airbus. The award is the largest in WTO history.
The United States plans to impose a 10% tariff on large civil aircraft from Britain, France, Germany and Spain. It will slap 25% levies on a range of other items including Irish and Scotch whiskeys, wine, olives, cheese, pork products, butter and yogurt from various nations, according to the U.S. trade representative’s office.
The U.S. removed leather goods — among other items — from its original proposed list, sparing luxury labels such as Givenchy and Louis Vuitton. Wine and spirits produced by LVMH, Remy Cointreau, Pernod Ricard and Diageo are among those affected by the levies.
Washington has requested that the WTO meet Oct. 14 to formally authorize the tariffs, and the duties would then take effect Oct. 18, according to the U.S. trade representative’s office. The Trump administration’s goal in imposing retaliatory duties is to persuade the European Union to reach a negotiated settlement, according to a senior U.S. trade official who briefed reporters Wednesday.
“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,” U.S. 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.”
Wednesday’s ruling is a milestone in the WTO’s longest-running dispute that will further test transatlantic relations, which have deteriorated under Trump’s “America first” approach to international ties. It’s also an example of Trump getting a favorable ruling from an organization he has threatened to pull out of.
The U.S. is already in a trade war with China, and any wider flare-up of tit-for-tat tariffs with Europe could threaten the already fragile global economy. On Tuesday, the WTO cut its trade growth forecast for this year to the weakest level in a decade, warning against a “destructive cycle of recrimination.”
The Trump administration has been considering a particularly damaging trade weapon known as “carousel” retaliation, which would enable the United States to regularly change which goods it targets with tariffs, people familiar with the deliberations said last month. That would increase trade uncertainty and pain for European businesses.
A senior member of the U.S. trade representative’s office who briefed reporters Wednesday said the Trump administration has the authority to periodically revise the retaliatory targets and tariff rates.
The EU will retaliate against any Airbus-linked tariffs when the WTO rules early next year on the bloc’s dispute over U.S. subsidies to plane maker Boeing Co., said European Trade Commissioner Cecilia Malmstrom.
“The mutual imposition of countermeasures, however, would only inflict damage on businesses and citizens on both sides of the Atlantic and harm global trade and the broader aviation industry at a sensitive time,” Malmstrom said, adding that the bloc is ready to work with the United States on a “fair and balanced solution for our respective aircraft industries.”
Airbus warned that tariffs on its aircraft and components would harm the U.S. aerospace industry, because about 40% of the company’s procurement comes from American suppliers.
The company also urged the Trump administration to take account of the forthcoming WTO decision on Boeing, saying those reciprocal tariffs could exceed the value of the U.S. sanctions. Airbus Chief Executive Guillaume Faury repeated calls for a negotiated settlement to the dispute.
The WTO has repeatedly ruled that Toulouse, France-based Airbus unfairly benefited from launch aid loans and other trade-distorting subsidies for two Airbus models, the A380 and A350WXB.
“Europe is facing tariffs today because Airbus has refused for years to comply with WTO rulings,” Boeing said in an email. “Unfortunately, Airbus’ non-compliance will negatively impact European Member States, industries and businesses completely unrelated to Airbus’s actions, as well as Airbus’s airline customers.”
An Airbus spokesman, meanwhile, noted that in a few months “the WTO will give the EU its own basis on which to seek countermeasures against the U.S.”
“The amount of the EU’s countermeasures may equal or exceed the countermeasures authorized by the WTO to the U.S.,” spokesman Clay McConnell said in an emailed statement.
The Trump administration wants an end to the EU subsidies in question, which Boeing and the United States say give Airbus an unfair advantage in the highly competitive international passenger aircraft market.
French Finance Minister Bruno Le Maire said the best solution would be one that lowers tensions, but he warned that the EU would respond firmly if the U.S. imposed tariffs.
“If the U.S. chooses to impose sanctions, it would be an economic and political error,” he said.