Fears Of A Trade War Between US And EU Are Being Reignited

Vanessa Conneely - 9th April 2019

As a result, the price of cheese and aircraft could become more expensive.

President Donald Trump has announced the US is proposing tariffs on EU goods worth €9.7 billion. Aircraft and cheese are among the products that could be hit by a tax hike across all member states, including Malta.

The threat from the President is in response to EU subsidies to Airbus. The move is also stoking fears that Trump may add tariffs on cars being imported from the EU.

While the proposed tariffs amount to less than 0.1 per cent of EU GDP, the reaction could compound the already tense relationship between the EU and the US.

Speaking on behalf of the President, US Trade Representative Robert Lighthizer told reporters: "This case has been in litigation for 14 years, and the time has come for action. The administration is preparing to respond immediately when the World Trade Organization issues its finding on the value of US counter-measures. 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."

While cheese and aircraft could become more expensive in Europe, in the US, salmon, lemons, cashmere sweaters, certain motorcycles and wall clocks could all be in the firing line if they come from any of the 28 EU states.

Last June, the EU announced a 25 per cent tariff on American products such as whiskey, tobacco, Harley Davidson motorcycles and peanut butter. They added another 50 per cent tax on items such as footwear, some types of clothing and washing machines. The tariffs came weeks after the Trump administration implemented a 25 per cent tariff on steel and 10 per cent tariff on aluminium, affecting trade partners like Canada, Mexico, and the EU. Donald Trump also threatened additional taxes on European cars if the EU chose to retaliate. Which it did.

Speaking at the time European Commission President Jean-Claude Juncker said duties imposed by the US on the EU go against "all logic and history."

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The figure marks a 38 per cent increase compared to the same period last year.