The trade tariff axe is now centered on EU products worth $11 billion.
European Union has provided subsidies in support of the European aerospace, defense group, and Airbus which were considered illegal by the WTO.
This has provoked the U.S. administration to propose a tax on EU products on agricultural goods, and aircraft. Even products like fish, olive oil, wine, and dairy products will fall under the tariff net.
The EU is at a critical phase currently, especially as the parliament elections are forthcoming next month. Brexit negotiations are another huge concern that involves a lot of uncertainty.
The U.S. has already levied tariffs on the steel and aluminum imports of Europe. Added to it, automotive products are facing tariff threats from the U.S. Now this new tariff will be an additional burden on the EU.
The U.S. trade representative Robert Lighthizer has suggested that the EU tariffs are justified. Brussels has failed to accept WTC rulings. All subsidies that are WTO-inconsistent will have to end, he says.
An official from the European Commission has said that the internal estimates of $11billio made by the U.S. are “greatly exaggerated”.
But it is found that both parties have been paying huge amounts to gain the upper hand in the business of aircraft manufacturing. In March, the WTO has stated that the U.S. has also not complied with the ruling regarding illegal subsidies received by Boeing.
Now Brussels is preparing to retaliate against Washington for failing to stop Boeing tax breaks. The WTO-arbitrator will be asked to determine its retaliation rights against the Boeing dispute.
Mr. Lighthizer says that Section 301 of the Trade Act 1974 will be used to impose sanctions on the EU goods. The same legislation had been used on Chinese imports too, last year.
Trade negotiations with China are almost coming to an end. Now Europe may be in for some tariff treatment.