USA threaten a full trade war against the European Union

Last year, the US imposed steel and aluminium tariffs on imports from the European Union. The US administration justified the tariffs based on national security. The EU retaliated, imposing duties on US goods like motorcycles, orange juice and bourbon.

Now that there is a truce in the US-China trade war, the USA is proposing a full trade war against the European Union. The Trump administration is threatening to introduce new tariffs on EU products worth $4bn (£3.2bn). The US Trade Representative’s office (USTR) said it was adding 89 tariff sub-categories to its initial list, including a variety of metals, in response to public comments. This is in addition to the $21 billion worth of EU goods that were announced and recorded in US Federal Register Vol. 84, No. 71 on Friday, April 12, 2019.

Why are the US threatening tariffs on EU products?

The USA is threatening to impose billions of dollars tariffs in response to a long running dispute at the World Trade Organization over aircraft subsidies given to U.S. aircraft manufacturer Boeing and its European rival, Airbus. In 2004, the US filed a complaint to the WTO stating that the EU provided illegal subsidies to Airbus. The European Commission retorted with its own complaint about subsidies to Boeing.

British Products

The USTR released lists of products made in the European Union that it is considering for additional import duties. These include scotch whisky, salmon, hams and pork, and popular British cheeses, such as Cheddar and Stilton. 

The inclusion of scotch whisky appears confusing, as the USTR signed a Wine and Distilled Spirits Continuity Agreement with the U.K. on January 31, 2019.  The agreement covering wine and distilled spirits was to ensure there is no disruption in trade of these products between the United States and the UK when the UK leaves the European Union. See my blog ‘The U.S. is preparing for trade talks with the UK after Brexit’.

In 2018 the US became the first country to import over £1bn of Scotch whisky, an increase of 7.7% on the previous year, according to the Scotch Whisky Association.

US Comments

The Distilled Spirits Council of the United States (DISCUS) criticised the move and claimed increased tariffs would harm US businesses.  If imposed, the tariffs could make the cost of buying Scotch and Irish whisky more expensive for US consumers.

Brexit Deliberations

Does the USA now believe the U.K. will not leave the EU on October 31st? 

If the UK does leave, will British goods be removed from the new US tariffs against the EU? 

We do know that the US will drive a hard bargain in any future trade negotiation with the UK and/or EU. 

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