US to impose tariffs on European planes, whisky
Levy of 10-25% tariffs on EU goods may take effect on October 18
GENEVA: The price of Scotch, French wine, cheese and other European exports is about to go up in the US after the Trump administration announced new tariffs on billions of dollars of EU products starting October 18.
US President Donald Trump got the go-ahead from the World Trade Organization (WTO) to impose tariffs on as much as $7.5 billion worth of European exports annually in retaliation for illegal government aid to Airbus. The award is the largest in WTO history.
However, there was relief for some firms as the US removed leather goods from its original proposed list and measures on wine and spirits weren’t as severe as some expected. Shares of European luxury companies gained after a Wednesday slide on concerns about tariffs and falling sales in the key Hong Kong market. LVMH gained as much as 2.4%, Kering SA ticked up as much as 1.7%, and Hermes International by 1.4% in European trading on Thursday.
Washington has requested the WTO meet on October 14 to formally authorise the tariffs, and the duties would then take effect October 18, according to the US Trade Representative’s Office (USTR).
The goal of the Trump administration in imposing retaliatory duties is to persuade the European Union (EU) to reach a negotiated settlement, according to a senior US trade official who briefed reporters on Wednesday.
WASHINGTON HAS REQUESTED THE WTO MEET ON OCTOBER 14 TO FORMALLY AUTHORISE THE FRESH TARIFFS
The US plan includes a 10% tariff on large civil aircraft from France, Germany, Spain and the UK. It will also slap 25% levies on a range of other items including Irish and Scotch whiskys, wine, olives and cheese, as well as certain pork products, butter and yogurt from various European nations.
The exclusion of leather goods spares luxury labels such as Givenchy and Louis Vuitton. Though wine and spirits produced by LVMH and Diageo PLC are among those affected by the levies, the 25% tariff was lower than analysts worst case scenario.
Remy Cointreau SA and Pernod Ricard SA dodged a bullet with the omission of cognac and champagne.
Overall, the US tariff list “represents a light touch and we would expect positive reaction for European spirits companies,” Jefferies analyst Edward Mundy wrote in a note.
The new US list does spare some Airbus parts including sections of fuselage that are used to assemble A320s for American buyers at a plant in Mobile, Alabama. State officials in Alabama had lobbied for parts used by the plant to be spared.
“Finally, after 15 years of litigation, the WTO has confirmed that the US is entitled to impose countermeasures in response to the EU’s illegal subsidies,” USTR Robert Lighthizer said.
“We expect to enter into negotiations with the EU aimed at resolving this in a way that will benefit American workers.”
The ruling on Wednesday is a milestone in the WTO’s longestrunning dispute that will further test transatlantic relations.