World Economy

EU Slaps Revenge Tariffs on US Goods

US assistant secretary of state for European and Eurasian affairs, Wess Mitchell, says Donald Trump’s approach towards his allies is about “strategic renovation”
EC Vice-President for trade Jyrki Katainen said, “If we chose products like Harley Davidson and peanut butter,  it’s because there are alternatives on the market.”EC Vice-President for trade Jyrki Katainen said, “If we chose products like Harley Davidson and peanut butter,  it’s because there are alternatives on the market.”

The European Union slapped revenge tariffs on iconic US products including Harley-Davidson motorcycles on Friday in its opening salvo in a trade war with President Donald Trump.

The tariffs, which took effect at midnight (2200 GMT Thursday) according to the EU's official journal, will further fuel jitters on world stock markets that are already alarmed by trade tensions between the United States and China, AFP reported.

Customs agents across Europe's colossal market of 500 million people will now impose the duty, hiking prices on US-made products in supermarkets and across factory floors.

Brussels imposed the raft of duties on US products worth €2.8 billion ($3.27 billion) in a tit-for-tat response to Trump's decision to slap stiff tariffs on European steel and aluminum exports.

EU Trade Commissioner Cecilia Malmstrom said this week that the 28-nation bloc was "left with no other choice" but to impose tariffs of its own after the "unilateral and unjustified decision of the US."

Together with US tariffs against Mexico and Canada, the trade battles have raised the specter of a global trade war, spooking financial markets that fear major consequences to the global economy.

"We have a trade war—and it's an escalating trade war," SEB chief economist Robert Bergqvist told AFP in an interview.

Brussels first drew up the list in March when Trump initially floated the 25% tariffs on steel imports and 10% on aluminum, which also target Canada, Mexico and other close allies.

The list does not specifically name brands but European Commission chief Jean-Claude Juncker spelled out in March that the bloc would target Harley-Davidson, peanut butter, Levi's jeans and other items. Cranberries, cranberry juice, orange juice and sweet corn are among the other food products targeted.

The list also hits clothing along with bed linen and men's leather footwear, eye make-up and lipsticks, plus a host of steel products.

Now the European Union is responding to Trump tariffs with carrots as well as sticks.

Political Impact

Juncker said on Thursday that the US decision to impose tariffs "goes against all logic and history". "Our response must be clear but measured. We will do what we have to do to rebalance and safeguard," he said.

European consumers would be able to find "alternatives", European Commission Vice-President for trade Jyrki Katainen said. "If we chose products like Harley Davidson and peanut butter, it's because there are alternatives on the market. We don't want to do anything that would harm consumers," he said on Thursday. "What's more, these products will have a strong symbolic political impact."

Analyst Bergqvist argued that his "main concern" over a trade war was the impact on stock markets—and the subsequent knock-on effect for the world economy. "All these kinds of things going on right now could trigger that kind of behavior and initiate a correction in the stock markets, and that could also trigger a slowdown in the global economy," he said.

Relations Reach New Lows

Transatlantic ties are at their lowest level for many years due to rows over a host of issues including the tariffs, the Paris climate agreement, the Iran nuclear deal and the new US embassy in Beit ul-Moqaddas (Jerusalem).

Relations plumbed new depths at the recent G7 summit when Trump abruptly rejected the joint statement and bitterly insulted his Canadian host, Prime Minister Justin Trudeau.

Trump claimed America had been obliged to levy the metals tariffs as it has been exploited as the world's "piggy bank". He is also targeting EU auto imports with a US probe now underway.

Trump's outbursts were the latest in which he has clashed with America's closest allies, even as he has had warm words for autocrats like North Korean leader Kim Jong-un, with whom he had a historic meeting last week, and Russia's Vladimir Putin.

But US assistant secretary of atate for European and Eurasian affairs, Wess Mitchell, said Thursday that Trump's approach towards his allies was about "strategic renovation".

"Strengthening the West means making hard decisions today when we initially disagree, rather than continuing to accept the appearance of transatlantic unity for the sake of avoiding disagreement," he told the Carnegie Europe think-tank in Brussels.

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