European Union hits back at US tariffs with taxes on bourbon, Harley Davidson bikes and other products

The EU tariffs on US exports will begin on Friday, in response to US President Donald Trump ordering tariffs on EU-produced steel and aluminium

PUBLISHED : Thursday, 21 June, 2018, 4:06am
UPDATED : Thursday, 21 June, 2018, 5:00am

The European Union will start taxing a range of US imports on Friday, including quintessentially American goods like cranberries and Harley-Davidson motorcycles, in response to US President Donald Trump’s decision to impose tariffs on European steel and aluminium.

The 28-nation EU’s trade chief, Cecilia Malmstrom, said on Wednesday that the bloc would introduce the tariffs on about 2.8 billion euros’ (US$3.4 billion) worth of US products. The tariffs, which had been announced earlier this year, had previously been expected to come into force next month.

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The goods targeted include typical American exports like bourbon, peanut butter, cranberries and orange juice, in a way that seems designed to put pressure on Trump and US politicians.

Harley-Davidson is from Wisconsin, the home state of House Speaker Paul Ryan, a Republican. Bourbon is a major product of Kentucky, where the Senate Republican leader, Republican Mitch McConnell, is from.

“We are left with no other choice,” Malmstrom said in a statement. Trump imposed tariffs of 25 per cent on steel imports and 10 per cent on imported aluminium from the EU on June 1. Europeans claim that is simply protectionism and breaks global trade rules.

“The rules of international trade, which we have developed over the years hand in hand with our American partners, cannot be violated without a reaction from our side,” she said.

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Trump said the measures against the EU are meant to protect US national security interests, but the Europeans claim it cannot be that close allies, many of them Nato partners, would endanger American security.

The EU exported some 5.5 million tons of steel to the US last year. European steel producers are concerned about a loss of market access but also that steel from elsewhere will flood in.

Economists note that on the whole, the US and EU tariffs will not immediately cause great damage to either side’s economy. The EU does not rely on the US as a market for its steel exports as much as Canada or Mexico, which are also being hit by the US tariffs and stand to lose more.

However, experts say the risk that the sides could keep adding tariffs could hurt business confidence, weighing indirectly on the economy.

The EU, which is the world’s biggest trading bloc, has taken its case to the World Trade Organisation.

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The spat comes amid a wider push by the Trump administration to hit other countries with tariffs that would reduce the US trade deficit. Its biggest target has been China, against which Trump this week ordered new tariffs on US$200 billion worth of goods.

That comes after the US put a 25 per cent tariff on US$34 billion of Chinese goods, to which Beijing responded by imposing an identical charge on the same amount of American goods.