(BN) U.S. Targets $3.1 Billion of EU, U.K. Imports for New Tariffs

 

U.S. Targets $3.1 Billion of EU, U.K. Imports for New Tariffs
2020-06-24 09:12:12.764 GMT

By Bryce Baschuk
(Bloomberg) — The U.S. is weighing new tariffs on $3.1
billion of exports from France, Germany, Spain and the U.K.,
adding to an arsenal of measures the Trump administration is
using against the European Union that could spiral into a wider
transatlantic trade fight later this summer.
The U.S. Trade Representative wants to impose new tariffs
on European exports like olives, beer, gin and trucks, while
increasing duties on products including aircrafts, cheese and
yogurt, according to a notice published late Tuesday evening.
The statement lays out a month-long public comment period ending
July 26.
If the U.S. follows through with its plan, it could hammer
European luxury brands like Givenchy and Hermes — which produce
leather goods — and Remy Cointreau and Pernod Ricard, which
make cognac and champagne. LVMH Moet Hennessy Louis Vuitton
would be particularly vulnerable because it produces a wide
array of these products.
The move is related to Europe and America’s 15-year-old
World Trade Organization aircraft subsidy fight. A couple of
years ago the Geneva-based trade arbiter said both the U.S. and
the EU were guilty of illegally supporting their respective
aircraft industries.
In October the U.S. gained the upper hand when the WTO
authorized President Donald Trump to retaliate against $7.5
billion worth of EU exports in response to Europe’s illegal
subsidies to Airbus SE. Next month the WTO is expected to
deliver a retaliation award to the EU in its separate but
related case against U.S. subsidies to the Boeing Co.

Carousel of Pain

In the meantime, Trump’s top trade official, Robert
Lighthizer, has sought to increase pressure on the Europeans by
deploying a particularly damaging tactic called “carousel
retaliation,” whereby a country periodically shifts tariffs on
different groups of goods.
Tuesday’s USTR notice is a reminder that the U.S.’s tariff
targets may shift or be subject to higher levies — a strategy
that spreads the sanctions pain across an array of industries,
creating uncertainty for businesses and headaches for exporters
and importers alike.
Earlier this year the U.S. deployed its carousel
retaliation strategy to increase tariffs on exports of Airbus
aircraft and parts from 10% to 15%. To date the U.S. has only
deployed tariffs on goods worth about half of its permitted
retaliation levels.
Lighthizer said his goal in increasing tariffs is to
persuade the EU to agree to a settlement. But talks between the
U.S. and the EU have floundered this year, and now the EU is
preparing to retaliate with new tariffs against an array of
politically sensitive U.S. industries.

Stalled Talks

“The U.S. has stepped back from the settlement talks in
recent weeks,” EU Trade Commissioner Phil Hogan told European
trade ministers on June 9. “If this remains the case, the EU
will have little choice but to exercise its retaliation rights
and impose our own sanctions.”
The EU has asked the WTO to give it the green light to
place levies on as much as $11.2 billion worth of U.S. exports
to Europe in retaliation for America’s illegal subsidies to
Boeing. The Trump administration argues the WTO award will be
much smaller, with only about $300 million at stake.
Regardless of the level of the WTO award, the U.S. is now
preparing to hit more European products as a means to dissuade
the EU from retaliating at all.
“There is no valid basis for the EU to retaliate against
any U.S. goods,” Lighthizer said last month. “We will continue
to press the EU to negotiate a resolution that respects the
WTO’s findings.”

To contact the reporter on this story:
Bryce Baschuk in Geneva at bbaschuk2@bloomberg.net
To contact the editors responsible for this story:
Brendan Murray at brmurray@bloomberg.net
Richard Bravo

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