President Donald Trump says the United States will impose new tariffs on more than $11 billion worth of exports from the European Union, after the World Trade Organization ruled previous year the EU was illegally subsidizing aircraft maker Airbus.
Trade analysts say it isn't unusual for countries to present a tariff target list before the WTO arbitrator sets actual parameters.
The United States wants to put tariffs on $11.2 billion worth of EU goods - from airplanes to Gouda cheese to olives - to offset what it says are unfair European subsidies for plane manufacturer Airbus.
The dollar fell and the rally in global equities lost steam on Tuesday as a USA threat to slap tariffs on hundreds of European goods and a downgrade by the International Monetary Fund in its global economic growth forecasts dimmed the appetite for risk.
"It will soon stop!" he wrote.
The threatened tariffs come just as EU members are in the final stages of negotiating the terms of a mandate for the European Commission, the EU's executive arm, to begin talks on industrial tariffs with the Trump administration.
The two sides have been locked in a years-long global trade dispute over mutual claims of illegal aid to plane giants, Netherlands-based Airbus and USA -based Boeing, to gain advantage in the world jet business. An Airbus spokesman said it had taken measures to comply with "relatively minor" outstanding requirements required by the WTO and that U.S. talk of $11bn worth of damage from European Union subsidies to Airbus was excessive. Airbus told Reuters it saw no legal basis for the US move and warned of deepening transatlantic trade tensions.
Late on Monday, the US Trade Representative (USTR) delivered a proposed list of goods that could be hit by the tariffs.
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The memo came to light in December only after Trump had sacked Sessions and chosen Barr to replace him. But Barr's phrasing in that letter is somewhat ambiguous.
"The new tariffs. are a drop in the ocean as a percentage of the overall trade between the USA and Europe and we view them as a negotiating tool to set the tone for what the really important negotiations are, namely autos", she said.
The EU is already facing US tariffs on its steel and aluminum exports and Trump has repeatedly threatened to hit EU cars with punitive duties.
Economists say the Trump team appears to want to use the ruling not merely to help Boeing but to heighten pressure on trading partners like Germany with which the USA has a trade deficit.
"Whether the tariffs will enter into force will also depend on whether there will be an agreement between the European Union and the US about the treatment of subsidies for the aviation industry", a German Economy Ministry spokeswoman said in an emailed statement. "The figure quoted by USTR is based on USA internal estimates that have not been awarded by the WTO".
"Our ultimate goal is to reach an agreement with the European Union to end all WTO-inconsistent subsidies to large civil aircraft".
President Donald Trump's administration has made punitive tariffs something of a signature, imposing many and frequently threatening them as a negotiation tactic.
Because Europe has accused the USA of subsidizing its own planemaker, Boeing.