In October World Trade Organizations Announce that the US can legally strike back at the EU by setting new tariffs for European exports of about $ 7.5 billion as a punishment for Europeans providing illegal Airbus government subsidies. At that time, we warned that it was like emitting gas from the eels of a trade dispute between the US and the EU, as the Trump administration’s car tariffs remained significant in the global economic landscape.
Since then, the United States has set some of these tariffs. Now Robert Lighthizer has a plan for the last 3.1 billion dollars
In accordance with the decision, the Office of the Trade Representation has finally compiled a list of European goods to which these tariffs will apply. But Lighthizer & Co. also plans to raise tariffs on other European goods, from planes and parts to dairy products such as cheese and yogurt, in accordance with a notice published late Tuesday night describing the department’s activities and opening a month period for comments to receive feedback. before moving forward.
In accordance with BloombergIf the United States fulfills this plan, it could hit European luxury brands and spirits producers when these companies are already seriously threatened by the outbreak of coronavirus, which is detrimental to alcohol consumption in restaurants and social events (although many buy more booze to enjoy at home).
If the United States fulfills its plan, it could hit European luxury brands such as Givenchy and Hermes, which manufacture leather goods, and Remy Cointreau and Pernod Ricard, which produce cognac and champagne. LVMH Moet Hennessy Louis Vuitton would be especially vulnerable because it produces a wide range of these products.
Rates for British gin may raise US prices at peak season for gin and tonic, which could hurt British alcohol companies such as Diageo Plc, London-based producer Tanqueray; James Burrow, creator of Gene Beefeater; and William Grant and Sons, creator of Gene Hendricks.
German imported beer would also be hit, potentially spurring the oversaturated American craft beer market.
New U.S. duties may also reduce demand for German beer before any Oktoberfest celebrations that have not yet been canceled due to coronavirus.
Additional import taxes will already add the 25 percent tariff imposed by the United States last year on imports of Scotch and Irish whiskey, as well as liquors and liquors from Germany, Ireland, Italy, Spain and the UK.
The Distilled Spirits Council in the United States stated that it opposes any additional tariffs for spirits that would “exacerbate trade tensions across the Atlantic and further jeopardize US companies and hospitality jobs already under pressure from COVID- 19, “the statement said.
BBG explains that the strategy used by the US Trade Representative is known as “carousel retaliation,” in which tariff-targeted industries sometimes move to spread pain around and introduce additional pain due to “uncertainty” about who will pursued by the following.
Meanwhile, Trump’s chief sales representative, Robert Lighthizer, has tried to increase pressure on Europeans by using a particularly destructive tactic called “carousel retaliation” when a country periodically changes tariffs on various groups of goods.
The USTR notice on Tuesday is a reminder that US tariff targets may change or be subject to higher fees – a strategy that distributes the pain of sanctions across a range of industries, creating business uncertainty and headaches for both exporters and importers .
Earlier this year, the United States launched its carousel retaliation strategy to raise export tariffs for Airbus aircraft and parts from 10% to 15%. To date, the United States has only deployed tariffs on goods, the cost of which is about half the acceptable level of retaliation.
Lighthizer said his goal in raising tariffs is to convince the EU to agree to a settlement. But negotiations between the US and the EU failed this year, and now the EU is preparing to retaliate with new tariffs against a number of politically sensitive US industries.
Both sides also have the opportunity to reach a settlement, but it is reported that the negotiations have become quite controversial, which forced the Europeans to retreat. This is why Lighthizer takes the extremely painful merry-go-round approach: the United States is increasing pressure on Europeans to give in and make a deal.
But with everything that happens, they will probably only be able to anger Brussels. As the world breaks out of the crisis with coronavirus, the US position is clear: every nation is for itself. Let’s see how they – and the market – will like it when the EU responds by introducing tariffs on US goods worth about $ 11.2 billion.
So much is at stake, it is not surprising that the market is disconnected this morning.