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U.S. hits Europe with tariffs in retaliation over Airbus, Boeing case

President Donald Trump tweeted that this was "a very nice victory!"
Image: Whisky
Bottles of whisky move along the production line at the Diageo owned Shieldhall bottling plant in Glasgow, Scotland.David Moir / Reuters file

LONDON — American lovers of Scotch whisky, French wine and Italian cheese might have to dig deeper into their pockets after the Trump administration slapped tariffs on $7.5 billion of European consumer products.

Although the tariffs include a wide range of food and clothes — such as British woolen suits and German coffee — the move is actually a retaliation for a 15-year dispute between the United States and the European Union over aircraft subsidies.

Washington says that U.S. aircraft giant Boeing has lost billions of dollars because European countries have improperly subsidized their own global competitor, Airbus.

On Wednesday, the World Trade Organization gave the U.S. the go-ahead to impose $7.5 billion of tariffs on E.U. goods to compensate.

The president tweeted Thursday that this was a "a very nice victory!"

European leaders have called for the disagreement to be solved without fresh taxes, pointing out that a separate WTO case has ruled the U.S. made similar improper subsidies to Boeing. But the U.S. said that offer was too little, too late.

"For years, Europe has been providing massive subsidies to Airbus that have seriously injured the U.S. aerospace industry and our workers," Trade Representative Robert Lighthizer said in a statement Wednesday.

European leaders have responded by suggesting they could fire back with their own tariffs, raising the specter of the U.S. becoming embroiled in yet another tit-for-tat trade war.

Washington and Beijing have exchanged levies on billions of dollars of goods. The U.S. announced last month that it was granting exemptions on more than 400 items imported from China, an acknowledgment, according to experts, that the conflict was hurting American consumers and businesses.

A European counterpunch on trade would be the latest disagreement between the president and his counterparts across the Atlantic.

Trump has repeatedly berated America's traditional allies over NATO, saying they should up their defense spending, and accusing them of unfair trade practices. He has caused other rifts by scrapping the landmark climate change and Iran nuclear deals, both of which are broadly supported by European nations.

"We are ready with our European partners to respond firmly," French Finance Minister Bruno Le Maire said in a tweet Wednesday, responding to the fresh U.S. tariffs.

Some of the biggest criticism of the decision came from the Scotch whisky industry, with single malt Scotch whisky alone making up half of the value of U.K. products taxed by Washington.

Around $1.2 billion of Scotch whisky is exported to the U.S. each year.

"This is a blow to the Scotch Whisky industry," Karen Betts, chief executive of the Scotch Whisky Association, said in a statement. "Despite the fact that this dispute is about aircraft subsidies, our sector has been hit hard."

The new U.S. measures will come into force as early as Oct. 18. They include 10 percent tariffs on Airbus parts and 25 percent duties on other goods.

On Wednesday, European shares logged their worst day since last December but steadied after the full list of tariffs showed that some aircraft parts were exempt, as well as certain luxury brands, such as French spirits maker Remy Cointreau and Louis Vuitton owner LVMH.