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In new attack, Trump threatens more tariffs against European Union

Published 04/09/2019, 01:02 PM
Updated 04/09/2019, 01:02 PM
© Reuters. FILE PHOTO:  U.S. President Trump participates in meeting at the White House in Washington

© Reuters. FILE PHOTO: U.S. President Trump participates in meeting at the White House in Washington

By Philip Blenkinsop, Tim Hepher and Susan Heavey

BRUSSELS/PARIS/WASHINGTON (Reuters) - U.S. President Donald Trump on Tuesday threatened to impose U.S. tariffs on $11 billion worth of European Union products, heightening tensions over a long-running transatlantic aircraft subsidy dispute and opening a new front in his global trade war.

The United States and Europe have been locked in a years-long spat over mutual claims of illegal aid to plane giants, Netherlands-based Airbus and U.S.-based Boeing (NYSE:BA) Co, to help them gain advantage in the world jet business.

The case, which has been grinding its way through the World Trade Organization for almost 15 years, is approaching the final stages of arbitration.

"The World Trade Organization finds that the European Union subsidies to Airbus has adversely impacted the United States, which will now put Tariffs on $11 Billion of EU products!" Trump said on Twitter. "The EU has taken advantage of the U.S. on trade for many years. It will soon stop!"

Trump's public attack on the EU came even as his administration has yet to hammer out trade deals with China and neighbors Mexico and Canada.

A day earlier, the U.S. Trade Representative proposed targeting a list of EU products for tariffs, ranging from large commercial aircraft to dairy products and wine, as retaliation for European aircraft subsidies. The final list is expected this summer.

In response, the European Commission said earlier Tuesday it had started to draw up plans to retaliate over Boeing subsidies.

"The Commission is starting preparations so that the EU can promptly take action based on the arbitrator's decision on retaliation rights in this case," a Commission spokesman said. "The European Union remains open for discussions with the United States, provided these are without preconditions and aim at a fair outcome."

Both sides have won partial victories in claiming Airbus and Boeing received unlawful subsidies but disagree on the amount involved and whether each has complied with earlier WTO rulings.

Airbus said it saw no legal basis for the U.S. move and warned of deepening transatlantic trade tensions.

The EU is already facing U.S. tariffs on its steel and aluminum exports and Trump has repeatedly threatened to hit EU cars with punitive duties.

French Finance Minister Bruno Le Maire told a conference in Paris that the two sides needed to reach a friendly agreement.

"When I see the situation global growth is in, I don't think we can afford to have a trade conflict, even if only on the specific issues of the aircraft industry in the United States and Europe," he said.

'MORE TIT-FOR-TAT'

The U.S. tariffs proposal put pressure on shares in European makers of aircraft and aerospace suppliers, wine, cheese and luxury goods.

Airbus shares closed down nearly 2 percent, while Boeing dropped 1.4 percent. Airbus suppliers such as Safran (PA:SAF) SA and Leonardo SpA also closed lower.

Analysts were divided over whether the ramped-up dispute would lead to greater global trade issues.

"Get ready for more tit-for-tat scrapping to follow," said John Woolfitt of London brokerage Atlantic Markets.

Germany is particularly apprehensive of possible U.S. tariffs on car imports. The United States is a major market for Volkswagen (DE:VOWG_p), Mercedes maker Daimler and BMW.

Moody's said on Tuesday that potential U.S. tariffs on imported autos and parts represented a significant risk to global growth and would hinder economic momentum in Germany, Japan and Korea.

" ... The U.S. wants to pressure the EU to engage in meaningful trade talks, but without having to apply the more painful measure of automotive tariffs,” said Cailin Birch, global economist at The Economist Intelligence Unit.

Fabiana Fedeli at Robeco sees the latest moves as tactical.

© Reuters. FILE PHOTO:  U.S. President Trump participates in meeting at the White House in Washington

"The new tariffs ... are a drop in the ocean as a percentage of the overall trade between the U.S. and Europe and we view them as a negotiating tool to set the tone for what the really important negotiations are, namely autos," she said.

Latest comments

EU is a organization that looks for handouts plain and simple not only from corporations , they take from rich nations and give to poor nations in the organization, it upholds regulations that are completely separated from reality ....US needs to get tougher with the EU to reduce tariffs on American cars, and other products, EU wants a one way street , well it doesn't work that way. Global trade means fair and balanced tariffs or no tarrifs between trading countries. Currenty they charge more for American cars than Americans charging EU tariffs on European cars..
Anub your last sentence makes sence. But it is Something a small talk between the eu and us can set straith. The rest is i am afraid all nonsence. Trump is using the strengt of the us economy and tarrifs to pressure other nations into a beter deal for the us. Nothing wrong with that. But the way he is going about it is like blackmail. Disrespectfull. Greedy. In the end the whole world will hate the us for this. And this will shorely have consequences for the us economy. Mark my Words.
funny how the US coaxed the EU in banning China technology, and question EU trade with other countries.. then the good old USA turns around put a knife into the back of the EU and tarrifs them since the EU has no where to run haha the US got them in their palm of their hands.
All countries should stand together to fight against Trumps, his people and tarriffs ***lol
I started by buying nothing that comes out of the USA. Hope more will follow.
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