The US has lined up $3.1bn of European products, ranging from German beer to British biscuits and gin, for further punitive tariffs as it considers its next move in a dispute with the EU over aircraft subsidies.
Initiating a consultation on how to proceed, the Office of the US Trade Representative on Tuesday issued a draft list of 30 different types of goods that could be hit with additional duties, including olives, pastry and cakes, beer and liquors such as gin and vodka, all imported from either France, Spain, Germany or the UK.
Until now, Washington has not taken full advantage of its right to impose additional levies of as much as 100 per cent on $7.5bn of European goods — the result of a World Trade Organization decision last year that the EU had failed to eradicate illegal support for Airbus aircraft.
Since then, the US has increased the punitive duties in stages, starting with additional tariffs of 10 per cent on aircraft, which it raised to 15 per cent last February, and 25 per cent on a range of European and British goods, ranging from food to tools and apparel.
Although USTR raised tariffs on plane imports in February, it then decided against a further increase of the 25 per cent levies placed on other goods, prompting relief from European diplomats.
Even before Tuesday’s announcement, USTR had a list of items that could potentially be subject to tariffs, including high-value items such as the kinds of cashmere clothes produced by French luxury brands and hardware products. While single-malt Irish and scotch whisky imported from the UK are already subject to tariffs, USTR is considering hitting non-single malt whiskies from the UK with tariffs.
The US finds itself in an advantageous position in the dispute because the WTO has yet to rule in a parallel case brought by Europe on US subsidies for Boeing. Brussels had hoped that the WTO would reach a decision this month on how much retaliation the EU can take against the US, but trade officials said that the decision may now not come until September.
Some of the new US proposals for punitive tariffs specifically target France, Germany, Spain and the UK, including beer and gin. European non-alcoholic beer is also in the USTR’s crosshairs.
The comment period on the additional duties is open until July 26.
Although the US has yet to decide on how to proceed, the announcement complicates an already tense trade environment between the EU and Washington.
Efforts by Brussels to reach a settlement with the US on aircraft subsidies have made little headway, and broader talks on a trade mini-deal briefly flickered into life earlier this year only to be shunted off the agenda by the coronavirus pandemic.
US officials have frequently lamented America’s goods trade deficit with the EU, which has risen from $146bn in 2016 to $178bn in 2019, according to data from the US Census Bureau.
The mood darkened last week after the Trump administration withdrew from international talks on how to tax technology giants, even while threatening to hit countries that imposed a digital services tax with further punitive tariffs.
Earlier this month, US trade officials launched a so-called section 301 investigation into a string of countries that are adopting digital services taxes. A section 301 probe is the same process used by the US in its trade war with China and can result in steep levies on countries Washington decides are engaging in unfair trade practices.
European diplomats consider the Airbus-related tariffs more acceptable because they were authorised by the WTO.
Respondents to the consultation should assess whether the additional tariffs would “cause disproportionate economic harm to US interests, including small or medium-size businesses and consumers”, the USTR said.
The European Commission declined to comment immediately.
