USA threatens with tariff on EU beer

The United States Trade Representative (USTR) published this week a list of 30 products including beer, gin, vodka, decaffeinated coffee, olives, chocolate and business tools such as metal stamping and punching equipment that could be subjected to new tariffs. Those goods which account for USD 3.1 billion of annual imports from Europe are now under review and could be hit with tariffs of as much as 100%.

The US has already imposed tariffs on USD 7.5 billion worth of EU goods such as wine, spirits and liqueurs, including a 25% tariff on Scotch Whisky and wine made in France, Spain, Germany and the UK which came into effect in October last year.

The United States see the tariffs as a way to put pressure on the EU to revise subsidies given to aviation company Airbus (EADSF) which gives them an advantage over US-based rival Boeing. The World Trade Organization has already sided with the U.S. in the dispute and concluded in 2018 that the subsidies were illegal and allowed the US to levy tariffs on EU goods, including aircraft, wines and cheese.

The WTO Appellate Body clarified that adjustments were needed to the A380 and A350 loans, or to remedy their market effects. Measures have therefore been taken on both programs relating to the respective loans of Members States or on the market effects those loans had on Boeing.

In December 2019, a WTO panel, assessing the measures the EU and Airbus have taken to comply with the WTO recommendations, has issued its findings and stated that the US should immediately reduce the USD 7.5 billion in tariffs that the WTO authorized to the US in October by around USD 2 billion. The panel argued that the loans for the development of the A380 no longer have an impact on Boeing sales and that therefore the value of the lost sales no longer exists.

Despite these findings, the US published in December a list of additional goods being considered for tariffs, such as wines made in all EU countries, and expanded the remit to include bulk wine, fortified wine and sparkling wine, as well as other whiskies made in Europe, most notably Irish whiskey. This list was now amended by the goods as listed above.

The EU sharply criticized the new move by the Trump administration, stating that the new tariffs will go beyond what is allowed by the WTO. "It creates uncertainty for companies and inflicts unnecessary economic damage on both sides of the Atlantic," said the EU. "This is particularly the case as companies are now trying to overcome the economic difficulties in the aftermath of the Covid-19 crisis."

The WTO it is now considering a parallel case involving illegal support for Boeing, which could see the EU imposing duties later this year.

Share this article: