04-10-2019 16:25

The United States has declared a Europe-wide trade war with Europe. What does the world economy expect?

The United States has declared a Europe-wide trade war with Europe. What does the world economy expect?

The administration of US President Donald Trump has launched a new wave of trade war with Europe, but this time it is very serious. In the near future, the US will export the largest package of 25% import tariffs in its history through the World Trade Organization. It includes hundreds of prominent European goods, including wines, cheese, meat and dairy products - and even British sweaters and even German knives. The reason - the competition between the two largest aircraft manufacturers in the world - European Airbus and American Boeing, has been compounded by the latter's serious problems.

Competition between Airbus and Boeing has become a pretext for a tariff war
The new tariffs were introduced by the Trump administration because of the World Trade Organization (WTO) decision. In 2018, he made a decision on a U.S. complaint filed 10 years ago.

The WTO considered that the EU would grant excessive subsidies to its main airline - Airbus Corporation. The airline registered in Toulouse has taken unfair market advantage by receiving € 18 billion in financial support for the production of the A380 and A350WXB aircraft, writes Bloomberg. As a result, American Boeing has failed to sell more than 300 planes, losing "a significant share of the world market," according to a US Federal Trade Commission report on tariffs.

“For many years, Europe has given huge subsidies to Airbus, which has seriously damaged the American aerospace industry and our workers. Finally, after 15 years of litigation, the WTO has confirmed that the United States has the right to take countermeasures against EU illegal subsidies, ”said Robert Litzer, a trade commissioner.

The American administration has decided to protect Boeing during one of the most difficult times in the company's history - after two disasters on the latest 737 MAX plane, which left 346 dead. The accidents were caused by an apparent breach of safety requirements by a US manufacturer, The Guardian writes. The company will have to pay enormous compensation to both the relatives of the victims and the air carriers who have had to refuse to operate the 737 MAX for some time. The main competitor of the 737 MAX is the European manufacturer liner A320 on the world market.

The formal tariffs at the WTO are expected to be approved on October 14 and take effect on October 18, the agency said in a statement. It will cost European makers $ 7.5 billion a year, the highest tariff rate in WTO history.

The US has imposed tariffs on hundreds of well-known European goods
Up to 25% tariffs were imposed on several hundred types of goods (mainly food and beverages) from different European countries - both individually and as a group. Most sanctions should hurt those countries that lent money to Airbus subsidies. These include Germany, France, Great Britain and Spain.

Here is an incomplete list of European goods that the US has set tariffs on:

10% tariff


25% tariff

Great Britain

Irish and Scottish whiskey
Wool sweaters
Wool costumes


Axes and knives
Microwave ovens

Great Britain and Germany

Biscuits and Waffles

Great Britain, Germany and Spain

Frozen pork
Olive oil

Great Britain, Germany, Spain and France


All EU countries

Cheese, pork fillet, pork sausage, butter, yogurt, fruit, cherry, mollusk, vegetable juices (except tomato).

Food importers in the U.S. expect that tariffs could seriously hurt businesses during a critical Christmas sales period. Representatives in the field are already complaining about the damage to cheese, beverage sales and the business losses of importers of these goods. "These tariffs will greatly weaken and may even destroy many of the small and medium-sized family businesses that export these goods to the United States," Robert Tobiasen, president of the National Association of Beverage Importers, told Reuters.

Investors fear a new crisis
Reports of a new trade war have exacerbated investors' fears about the prospect of a world economy - especially in light of the continuing US-Chinese trade war and Brexit.

On October 2, world stock markets closed with the biggest decline in recent months. The American Stock Exchange index Dow Jones fell 3% in two days, marking the beginning of the worst quarter since 2008. The American S&P 500 fell 1.8%, while the Nasdaq fell 1.6%. The London Stock Exchange's FTSE 100 index is down 3.2% - the strongest decline since January 2016. Asian stocks have risen as well - Nikkei has fallen by 2% in Tokyo, while the Australian ASX200 has lost 2.2%, writes The Guardian.
In itself, the trade dispute between the US and Europe does not last for the first year. However, during Donald Trump's presidency, his policy of "America above all" has intensified the struggle. Moreover, Trump has described the EU as "worse than China, simply smaller" and threatened Europe with painful tariffs on import vehicles.

At the same time, Europeans can respond to Trump with even more painful tariffs through the WTO, France 24 writes. In a 2005 case initiated by the organization, the EU argued that in 1989-2006, Boeing received a $ 19.1 billion subsidy from the US government. After several legal successes, the EU appealed to the WTO and asked for a $ 12 billion fine to be imposed on American goods. The WTO appears to have resolved the issue positively after about six months, though it will reduce tariffs.
Source -> https://imedinews.ge

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