Europe targets US coal and farms in trade staredown

WASHINGTON: Transatlantic relations could reach a new low next month, as the European Union (EU) readies tariffs on billions of dollars of American exports aimed at politically important industries for president Donald Trump and his Republican allies in Congress.

The EU has asked the World Trade Organisation (WTO) to give it the green light to place levies on Us$11.2bil of US products over a long-running aircraft subsidies dispute. A ruling is expected as soon as in July and the EU is planning to target coal producers, farmers and fisheries, in addition to the makers of aircraft and parts.

The potential flashpoint comes at a sensitive time, with companies struggling under historic virus-induced recessions and as the November presidential election draws sensitive industries, especially in the American heartland, into ongoing trade conflicts.

Missouri, home to Republican Senators Roy Blunt and Josh Hawley, could be a focus of EU tariffs on coal, as well as House GOP leader Kevin Mccarthy’s California district that produces fruits and nuts.

While the EU has asked for a multi-billion-dollar award in the case, in which the US was found to have given illegal subsidies to Chicago-based Boeing Co, Washington has said it expects the WTO to issue a much narrower ruling, with only about Us$300mil at stake.

The sheer number of pending disagreements between the EU and the US means that a dispute could escalate quickly into a trade war. Earlier this month, Trump renewed a threat to hit European cars with levies, a move that would draw immediate retaliation from the bloc, and has prepared to hit countries including France, Spain and Italy with tariffs if they institute a tax on international technology companies.

The Boeing case comes less than a year after the WTO delivered the US a record Us$7.5bil retaliation award in response to the EU’S illegal subsidies to Airbus SE. The US has since levied 15% duties on Airbus aircraft and 25% tariffs on a range of European consumer exports, such as Scotch and French wine.

A large ruling in the Boeing case would allow the EU to retaliate over the Airbus tariffs and would also give the bloc more leverage in negotiating a settlement to the dispute. It would also allow the EU to capitalise on the delicate political situation in the US as Trump’s re-election campaign goes into full swing.

Targeting the Us$2.7bil in coal exports to the EU would hit at the base of Trump’s support and would add another headache for the struggling industry.