Trump slaps tariffs on European alcohol, cheese, and aircraft

The Trump administration has received the green light from the WTO to impose tariffs on EU products in response to illegal EU subsidies for Airbus.

Paul Wiseman and Jamey Keaten had the news for the AP:

The Trump administration plans to impose tariffs on $7.5 billion worth of European imports _ from gouda cheese to single-malt whiskey to large aircraft _ beginning Oct. 18 to retaliate against illegal European Union subsidies for aviation giant Airbus.

The latest escalation in the administration’s tariffs will open a new chapter in the trade wars that are depressing the world economy and heightening fears of a global recession. It comes just as the Trump administration is in the midst of trying to negotiate a resolution to its high-stakes trade war with China.

The administration received a green light for its latest import taxes Wednesday from the World Trade Organization, which ruled that the United States could impose the tariffs as retaliation for illegal aid that the 28-country EU gave to Airbus in its competition with its American rival Boeing.

The WTO announcement culminates a 15-year fight over EU subsidies for Airbus.

EU aircraft will face a 10% import tax; other products on the list will be hit with 25% tariffs . The administration insists that it has the authority to increase the tariffs whenever it wants or to later the products in its list.

President Donald Trump called the WTO ruling a “big win for the United States” and asserted that it happened because WTO officials “want to make sure I’m happy.”

CNN’s Hanna Ziady and Charles Riley reported:

The Trump administration had initially proposed tariffs of up to 100% on $25 billion of European items, including new aircraft from France, Germany, Spain and the United Kingdom -— all countries where Airbus has production sites. Cheeses such as Parmesan and Gouda were on the original list of target products, which also included wines and meats, olive oil, olives and pasta from across the European Union.

In the coming months, the WTO will determine the amount of countermeasures the European Union can impose on US products because of unfair subsides to Boeing.

If both sides elect to impose tariffs, this “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,” Malmström added.

Airbus reiterated calls for talks, saying tariffs would be a “barrier against free trade,” and negatively affect airlines, travelers and jobs in the United States.

“Airbus is therefore hopeful that the US and the EU will agree to find a negotiated solution before creating serious damage to the aviation industry as well as to trade relations and the global economy,” CEO Guillaume Faury said in a statement.

According to CNBC’s Yen Nee Lee, however:

Washington and Brussels have not achieved much in their past trade negotiations, so the U.S. tariffs on $7.5 billion of European goods could stay in place for many months, said Clete Willems, who was deputy director of the National Economic Council, told CNBC’s “Squawk Box Asia” on Thursday.

“It’s a big deal: $7.5 billion is the largest retaliation number that the WTO has ever authorized. So, it’s a big victory for the United States,” said Willems, who’s now a partner at law firm Akin Gump after leaving his White House position in April.

“At the end of the day, what they’d like to do is use these tariffs for leverage to get a negotiated outcome,” he said. “But I do think that the two sides haven’t worked together particularly well when it comes to trade negotiations lately and it may take some time for them to work through these issues … so you are going to see these tariffs in place for some period of months.”

The WTO outcome on Wednesday came after years of wrangling over subsidies that aircraft maker Airbus received from several European governments. The U.S. first lodged the complaints in 2004.

In response to the WTO ruling, the EU suggested it would retaliate against U.S. tariffs.