With all eyes focused on the trade conflict between the U.S. and China, brewing tensions between the U.S. and the EU are getting less attention then they deserve.
In October 2019, the World Trade Organization (WTO) said that the U.S. could legally impose new tariffs on $7.5 billion worth of European exports in response to the E.U.’s illegal government subsidization of Airbus.
At the time, President Trump had recently authorized a set of auto tariffs.
Since last October, the U.S. has implemented some of those tariffs ($4.4 billion worth). Covid-19 put a pause on the U.S.-E.U. trade talks, but now, U.S. Trade Representative Robert Lighthizer has plans for the remaining $3.1 billion of tariffs allotted by the WTO.
This time around, Mr. Lighthizer’s using a strategy known as “carousel retaliation.” The industries targeted by tariffs will be shifted from week-to-week, hitting luxury brands, aircraft parts, and even dairy products somewhat indiscriminately.
The uncertainty constantly changing tariffs could have a severe impact on European exports, as well as American importers.
At the core of the dispute is the EU’s taxation of American digital companies, like Google, Facebook, and Amazon. U.S. officials say these corporations being taxed unfairly when doing business in Europe. In addition, these companies are said to be subject to “illegal tariffs” not authorized by the WTO.
This comes on the back of pending law suits by the EU against Amazon and Apple for what is said to be unfair trade practices.
“What they’re doing is fundamentally unfair to American companies,” U.S. Trade Representative Robert Lighthizer told Congress last week, saying that these ‘celebrity’ companies were being targetted.
