On Monday, the European Union announced it will impose up to $4 billion in tariffs targeting American goods and services following a World Trade Organization (WTO) ruling that found the US government guilty in providing illegal aid to its plane maker Boeing. The EU proceeding comes at a very inconvenient time for the US, especially given that its economy still remains 3.5% below levels recorded at the end of 2019.
The battle between the EU and America began back in 2004, when the US government filed a complaint with the WTO over Germany, Spain, Britain, and France allegedly providing illegal grants and subsidies in support of aircraft manufacturer Airbus. At the same time however, the EU also filed a similar complaint, accusing the US of issuing subsidies to its aircraft manufacturer Boeing. Finally in April 2019, the WTO found that both Boeing and Airbus received illegal government aid, and as a result both the EU and the US are allowed to impose tariffs worth $4 billion and $7.5 billion on imported goods.
Back in October 2019, the US slapped the EU with $7.5 billion worth of tariffs on a variety of products, including French wine, cheese, scotch whiskey, and of course a 10% tariff on all Airbus jets in retaliation for EU’s subsidies to Airbus. Now however, the EU has decided to act on the WTO ruling, and will be issuing its share of tariffs worth up to $4 billion on American goods, including dried fruit, tobacco, handbags, motorcycle parts, tractors, rum and vodka, and frozen fish. In September 2020, US exports of goods and services to the EU fell from $27.4 billion in January to only $19.7 billion in September 2020.
Information for this briefing was found via the US Census Bureau and the Commerce Department. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.