EU vows to hit back against US tariffs on aircrafts, cheese

Manufacturers face an increasingly unstable global economy as EU leaders threaten countermeasures for new U.S. tariffs, which go into effect Oct. 18.

Francois Mori/AP
An Airbus A380 takes off for its demonstration flight at the Paris Air Show, in Le Bourget airport, June 18, 2015. As a retaliation for illegal Airbus subsidies, The World Trade Organization will let the United States tax up to $7.5 billion worth of goods from the EU.

The European Union warned Thursday it will retaliate against the U.S. decision to slap tariffs on a range of the bloc’s exports – from cheese to wine – that could cause job losses in Europe and price increases for Americans.

The Trump administration’s decision to put new import taxes on EU goods worth $7.5 billion opened a new chapter in the global trade wars that are heightening fears of a global recession.

The latest tariffs target large aircraft but also many typical European products such as olives, whiskey, wine, cheese, and yogurt. They will take effect Oct. 18 and amount to a 10% tax on EU aircraft and steep 25% rate on everything else.

The United States got the legal go-ahead Wednesday from the World Trade Organization in a case involving illegal EU subsidies for the plane maker Airbus.

But the EU is expecting a similar case involving U.S. subsidies for Boeing to go in its favor, with a ruling due in coming months. It has said it hopes the two sides can hold off new tariffs, which economically amount to taxes on domestic importers. Sometimes importers pass on the higher costs to consumers, making goods more expensive.

“If the U.S. imposes countermeasures it will be pushing the EU into a situation where we will have to do the same,” said the European Commission’s spokesman, Daniel Rosario, echoing the dark outlook expressed by many EU governments.

“This is a move that will first and foremost hit U.S. consumers and companies and will make efforts towards a negotiated settlement more complicated,” he said.

Mindful that the tariffs do not actually come into effect for a couple weeks, Mr. Rosario stressed that the EU is still open to talking.

The tariffs come on top of existing ones that the U.S. and EU exchanged last year and multiply the headaches for European businesses fretting over Brexit, which could see Britain leave the EU on Oct. 31 without a deal – meaning new tariffs overnight on the heavy flow of trade across the Channel.

More broadly, the tariffs add to uncertainty for the global economy, which has been hit particularly hard by the U.S.’s bigger and nastier trade war with China.

It all adds up to a grim outlook for exporters and manufacturers, which are cutting down on investment.

The head of the Spanish Federation of Food and Beverage Industries, Mauricio García de Quevedo, said the new U.S. tariffs will make it harder for the companies he represents to compete internationally. And that will contribute to job losses, he said, without providing detail.

The U.S. is the Spanish sector’s second biggest food and beverage client after the EU, according to the federation. The sector exported $1.9 billion last year.

Miguel Blanco, the secretary-general of Spain’s farming sector umbrella group COAG, representing more than 15,000 Spanish farmers and livestock breeders, said the tariffs are “completely unfair and overblown.”

“Once again, the farming sector is going to pay for an EU trade war which has nothing to do with the Spanish countryside,” Mr. Blanco said, according to Europa Press.

In Germany, which has Europe’s largest economy and focuses heavily on exports, the federation of industry said the U.S. was using the WTO ruling to intensify trade disputes.

U.S. President Donald Trump has threatened in the past to impose tariffs on European cars, a huge sector in Germany, and some fear this week’s escalation could lead to that.

Joachim Lang, the head of the Federation of German Industries, said “there is a risk that many industries on both sides of the Atlantic will find themselves in a lose-lose situation.”

This story was reported by The Associated Press. AP writers David Rising and Sylvie Corbet contributed to this report.

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