US imposes duties on European imports: what will rise in price

On Wednesday, October 2, the Trump administration announced the introduction of duties on European aircraft, French wine and cheese, Spanish olive oil and other goods. The innovations will come into force on October 18 2019 as a result of the fact that the World Trade Organization (WTO) allowed the United States to annually tax European exports with duties up to $ 7,5 billion.

Фото: Depositphotos

This move was part of a long-standing U.S. complaint about the subsidies received by the European aircraft manufacturer Airbus, and the loss of the American aircraft manufacturer Boeing.

The World Trade Organization’s decision gives the United States the opportunity to impose enough duties to block $ 7,5 billion worth of trade from Europe each year until both sides reach a negotiated settlement or decide that Europe is following its rules.

The introduction of duties may raise prices for American goods and consumers who import goods from Europe. Ultimately, airlines, manufacturers, and grocery store customers will suffer.

The administration plans to introduce an 25 percentage tax on imports of Parmesan cheese, mussels, coffee, whiskey and other goods from Europe.

In addition, the decision of the administration may lead to further exacerbation of tension in relations with the European Union.

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The decision of the World Trade Organization put an end to the approximately 15-year dispute over the financial assistance that Europe provides to its main aircraft manufacturer. Last May, the organization ruled that Europe illegally subsidized several Airbus models.

“For many years, Europe has provided huge Airbus subsidies that have severely damaged the US aerospace industry and our employees,” said Robert Lighthizer, US Trade Representative. He added that the States want "to be beneficial to American workers."

European officials said they are keen to come to an agreement, but also willing to impose duties on US goods.

Interestingly, the World Trade Organization is considering a parallel case. The EU has brought charges against Boeing against the United States. The EU has compiled its own list of US goods worth 20 billions of dollars, which it could tax in response to this.

The World Trade Organization is expected to announce its decision early next year.

An escalation of trade disagreements with Europe would open another front in world trade warTrump took to try to change the terms of trade. The president has already introduced tariffs of more than $ 360 billion on goods from China, in addition to duties for washing machines, solar panels, steel and aluminum from Japan and Europe.

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The Trump administration’s actions have raised the average US tariff rate to levels unprecedented for decades — the United States currently has the highest tariff levels among all the industrialized G7 countries.
The new duties will differ from those imposed by Trump on Chinese goods, imported steel and aluminum, as they are pre-approved by the World Trade Organization.

Despite the fact that tariffs will comply with global rules, they can still put pressure on the economy and US companies.

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