European Union hits back with tariffs on US goods

The European Union is set to slap tariffs on 3.4 billion dollars (€2.9 billion) in American products, from whiskey and motorcycles to peanuts and cranberries.

India and Turkey have already targeted US products, ranging from rice to autos to sunscreen, and in two weeks, the United States is to start taxing 34 billion dollars (€29 billion) in Chinese goods.

Beijing has vowed to immediately retaliate with its own tariffs on US soybeans and other farm products in a direct shot at President Donald Trump’s supporters in America’s heartland.

Cecilia Malmstrom, the EU’s trade commissioner, acknowledged that the EU had targeted some iconic American imports for tariffs, such as Harley-Davidson motorcycles and bourbon, to “make noise” and put pressure on US leaders.

John Murphy, a senior vice president at the US Chamber of Commerce, estimates that 75 billion dollars (€64 billion) in US products will be subject to new foreign tariffs by the end of the first week of July.

“It will be a disaster,” said Nagesh Balusu, manager of the Salt Whisky Bar and Dining Room in London and expects the European Union’s tariffs to add more than seven dollars (€6) to the price of a bottle of Jack Daniels, which is imported from Tennessee.

“It’s going to hit customers, that’s for sure. How they’ll take it, we’ll have to wait and see.”

As painful as the brewing trade war could prove, many have seen it coming.

Mr Trump ran for the presidency on a vow to topple seven decades of American policy that had favoured ever-freer trade among nations.

He charged that a succession of poorly negotiated accords — including the North American Free Trade Agreement and the pact that admitted China into the World Trade Organisation — put American manufacturers at an unfair disadvantage and destroyed millions of US factory jobs.

He pledged to impose tariffs on imports from countries that Mr Trump said had exploited the United States.

Late last month, Mr Trump proceeded to infuriate US allies — from the EU to Canada and Mexico by imposing tariffs of 25% on imported steel and 10% on aluminium.

The president justified the move by saying imported metals threatened America’s national security — a dubious justification that countries have used rarely because it can be so easily abused.

He is threatening to impose another national security-based tariff on imports of cars, trucks and auto parts.

Mr Trump has also started a trade fight with China over Beijing’s sharp-elbowed efforts to overtake US technological dominance.

The White House last week announced plans to slap 25% tariffs on 1,100 Chinese goods, worth 50 billion dollars (€43 billion) in imports.

Mr Trump would start on July 6 by taxing 34 billion dollars-worth (€29 billion) of products and later add tariffs on an additional 16 billion dollars (€13.7 billion) in goods.

The Chinese have said they will respond in kind.

Mr Trump said he would then retaliate against any counterpunch from Beijing by targeting an additional 200 billion dollars (€172 billion) in Chinese products, and then yet another 200 billion dollars if China refused to back down.

All told, the 450 billion dollars (€387 billion) in potential tariffs would cover nearly 90% of goods China sends to the United States.

“We oppose the act of extreme pressure and blackmail by swinging the big stick of trade protectionism,” a spokesman for China’s Commerce Ministry said on Thursday.

“The US is abusing the tariff methods and starting trade wars all around the world.”

The tariffs and threats have begun to take a toll. Steel and aluminium prices, for example, have shot up and supplies have become scarce.

“Steel pricing is usually relatively stable,” said Al Rheinnecker, chief executive of American Piping Products in Chesterfield, Missouri, which distributes steel pipe to numerous industries.

But “since April, you can quote something on Monday, and if the customer does not buy it right away, you may have to raise the price on Thursday.”

- Press Association

 

Join the conversation - comment here

House Rules for comments - FAQ - Important message for commenters


Most Read in Business

World Markets