European Union tariffs target United States goods from motorbikes to jeans

Virginia Carson
June 22, 2018

This month, the President said that, by July 6, the United States will impose stiff 25 percent tariffs on several kinds of Chinese goods, worth an estimated US$34 billion - a figure that could rise as high as $200 billion if the list of goods is widened.

In two weeks, the USA is due to start taxing $US34 billion in Chinese goods.

Together the trade battles have raised the spectre of a global trade war, spooking financial markets that fear major consequences to the world economy.

The agreed European Union countermeasures will initially target a list of United States goods worth $3.2 billion (€2.8 billion), most of which will be hit with import duties of 25 percent.

The EU also has in reserve potential tariffs of 10 per cent to 50 per cent that it could impose on a further €3.6 billion of USA imports in three years.

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Europe's autos stocks sold off rapidly, down as much as 1.3 percent, and Germany's DAX index fell into negative territory, down 0.2 percent as big German carmakers Daimler, Volkswagen (VOWG_p.DE) and BMW, which are heavily reliant on USA vehicle sales, suffered. "However, the unilateral and unjustified decision of the United States to impose steel and aluminium tariffs on the EU means that we are left with no other choice", EU Trade Commissioner Cecilia Malmstrom said.

The also locked in a tariff showdown with China, after President Trump said he would use the import taxes to try to shift the balance of trade between the world's top two economies.

That means the EU's 10 percent tax on USA auto imports and the 2.5 tariff on auto imports in the US would end.

Malmström added that if the USA removes its tariffs, the European taxes would also be lifted.

"He's right, we make great cars in the United States".

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The White House last week announced plans to slap 25 percent tariffs on 1,100 Chinese goods, worth $50 billion in imports. MORE, Trump's former top economic advisor said last week the president had expressed an interest in only having cars in the USA that were made here. Trump is also looking at new tariffs on auto imports, opening a new front in the trade war. So even if the USA and China are having this battle, trade diversion means what may happen is that many of their market groups will be dumped on other markets to ensure that they don't overconsume or overproduce.

However, China accused the USA of an act of "extreme pressure and blackmail" and said it would respond with "strong countermeasures".

The commission formally adopted the new tariffs, allowing them to come into effect on June 22.

The spat is part of a wider tussle over global trade.

The rising tensions and the chaos surrounding the steel and aluminum tariffs are starting to generate pushback on Capitol Hill. Therefore, I don't want cars made oversees.

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