In Depth

Why Donald Trump is slapping the EU with £8bn tariffs

White House announces retaliatory measures for ‘harmful’ subsidies to European aircraft manufacturer Airbus

US President Donald Trump appears poised to reignite his ongoing trade war with the rest of the world, by imposing tariffs on $11bn (£8bn) of EU goods.

The US has repeatedly complained that EU subsidies designed to support European aircraft manufacturer Airbus have “adverse affects” on US firms - a conclusion supported by a recent World Trade Organization (WTO) report, The Daily Telegraph reports.

US aircraft manufacturer Boeing claims that the subsidies give the rival company “an unfair advantage in the highly competitive passenger aircraft market internationally”, says Bloomberg.

According to reports, the new US tariffs would affect not only aircraft but also a wide range of other European goods including suits, wine, butter, fish, jam, olive oil and some 40 types of cheese.

The Guardian says that “just like the EU’s previous threats to hit American export icons such as Harley-Davidson motorbikes, Levi jeans and bourbon whiskey”, the US appears to be targeting “symbolic European products”.

However, Bloomberg notes that the proposed measures are “relatively minor compared with the US’s ongoing trade war with China”, in which the two sides have imposed tariffs on approximately $360bn (£275bn) of each other’s goods in the past year.

Nonetheless, the threat of new tariffs marks “a significant escalation in tensions with the EU”, following a lesser tit-for-tat tariffs exchange last year, the business news site adds.

Announcing the proposed measures this week, Trump’s US trade representative, Robert Lighthizer, said: “This [Boeing-Airbus] case has been in litigation for 14 years, and the time has come for action. The administration is preparing to respond immediately when the WTO issues its finding on the value of US countermeasures.

“Our ultimate goal is to reach an agreement with the EU to end all WTO-inconsistent subsidies to large civil aircraft. When the EU ends these harmful subsidies, the additional US duties imposed in response can be lifted.”

Airbus shares dropped by 1.7% today in the wake of the news, but remain up by around 40% over the previous year, following a series of disasters for main rivals Boeing.

The US-based firm has suffered in the wake of a worldwide grounding of its new 737 Max 8 fleet in response to two deadly crashes caused by faults in the downed planes’ automated safety systems.

Neil Wilson, chief market analyst at Markets.com, said that the new US tariff threats look like a contained problem but that there is a significant “risk of contagion if the EU decides to respond in kind”.

The Telegraph suggests that the tariffs might be a “precursor to US plans to also target Europe’s embattled car industry”. The newspaper notes that the Trump administration is currently “mulling tariffs on EU cars after Commerce Secretary Wilbur Ross submitted a report in February on whether they pose a threat to national security”.

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