European Union (EU) retaliatory tariffs on US goods

June 22, 2018 Facebook Twitter LinkedIn Google+ Market & Economic Information

Harley Davidson hit hard by new EU import tariffs

New tariffs on US goods

The European Union has announced that as of Friday, it will impose tariffs on $3.2 billion worth of American goods including bourbon, peanut butter, and Harley-Davidson motorcycles. The move is in response to President Donald Trump’s decision to impose harsh import taxes targeting the EU earlier this month.

The EU is strategically choosing products that will hit Republicans hard. According to lists submitted to the World Trade Organization, the bloc of 28 European countries plans to enact a 25 percent tax on American products made in vulnerable Republican-heavy states, such as orange juice from Florida. The state, which had majority support for Trump in the 2016 election, could be key for Republicans to win over in this year’s midterm election.

The blow comes after Trump officially enacted a 25 percent steel tariff and 10 percent aluminum tariff on goods from the EU, Canada, and Mexico last month. He also threatened to impose taxes on European cars if the EU retaliated.

Imposing tariffs will make the affected American goods more expensive for European consumers, which doesn’t fare well for US manufacturers; the demand for those goods will likely decrease, meaning that US workers could be at risk of losing their jobs if profits start to plummet.

Trump keeps picking fights with major trading partners. This month has been especially contentious for Trump, who has launched trade fights with several countries that have traditionally been close US trading partners.

Last Friday, after Trump announced his intention to impose a massive tariff on $50 billion worth of Chinese goods, the Chinese ministry of commerce struck back, threatening tariffs of the same amount on US products that specifically target American farmers and industrial workers in the Midwest.

Earlier this month, Mexico also enacted tariffs on US goods to target states with large concentrations of Trump voters.

This means that China, Mexico, and now the EU are all seeking retribution by targeting key red states. Going into the 2018 midterm elections, that may be very bad news for the GOP.

India, meanwhile, has said it will raise taxes on 29 products imported from the US – including some agricultural goods, steel and iron products – in retaliation for the wide-ranging US tariffs. The new duties will come into effect from 4 August and will affect US almonds, walnuts and chick peas, among other products.

India is a top buyer of US almond exports and so the move is expected to hurt farmers in America.

The Trump administration announced in March that it would introduce tariffs of 25% on steel and 10% on aluminium imported into the US.

After being deferred, the duties on steel and aluminium went ahead on 1 June and affect the EU, Canada, Mexico and other close US allies, including India.

Click to download and see the complete list (.pdf) published by the World Trade Organization of US goods hit by new EU import tariffs.