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U.S. threatens tariffs on European cheese over Airbus-Boeing case

  • The U.S. Trade Representative's Office (USTR) is proposing new tariffs on European imports including Italian cheeses like parmesan as well as Irish and Scotch whiskies.
  • The tariffs, which are on top of earlier import taxes proposed in April, are tied to a dispute over what the U.S. says are illegal aircraft subsidies for Europe's Airbus.
  • The USTR will hold hearings Aug. 5.

The U.S. is proposing new tariffs on an additional $4 billion of goods from the European Union over what it says are illegal aircraft subsidies for Airbus. The products that could be targeted by the import taxes include popular European foods and drinks, ranging from Italian parmesan cheese to Irish and Scotch whiskies.

The proposed tariffs stem from a longstanding dispute between Europe's Airbus and its U.S. rival Boeing, an issue that predates President Donald Trump's protectionist trade policies by more than a decade.

The new tariffs, which also target olives, ham and coffee as well as non-food items like copper products, follow on an April threat to add tariffs to $21 billion in EU imports. The Trump administration's tariffs are pending the resolution of the Airbus-Boeing dispute, which is currently being heard by the World Trade Organization. 

In the meantime, the USTR will hold a hearing Aug. 5 and is soliciting comments on tariffs tied to the dispute.

In a statement, a Boeing spokesman said "Because Airbus has refused to end its egregious use of subsidies, the WTO has authorized the United States Government to impose large-scale tariffs on the importation of European goods in a bid to persuade Airbus and the European Union to comply with its rulings."

In an e-mailed statement, an Airbus spokesman said the development adds to trade tension, but, in its view, doesn't change the process.

"Our view remains that the appropriate level of tariffs in either direction (by the U.S. or by the E.U.) would be defined by WTO. The current situation is not creating an environment conducive to working towards a negotiated solution, and it risks creating a lose-lose situation for industries on both sides of the Atlantic," Airbus said.

EU retaliation

The EU, which has accused the U.S. of what it claims is similar unfair support of Boeing, has readied tariffs of its own, Bloomberg reports

If enacted, these tariffs would differ strategically from the Trump administration's trade war with China, which is focused on securing more favorable trading terms with that country. Instead, these new EU tariffs would be imposed in response to an official World Trade Organization ruling, analysts noted. 

Nevertheless, the tariffs could provide a glimpse at how the administration could respond to additional disputes with the EU, analysts at Height Securities wrote in a research note. The EU and U.S. are in a fragile truce after Mr. Trump last year slapped duties on steel and aluminum imports and threatened new ones on cars. The EU responded in kind with its own tariffs. 

"We still view it as representative of a greater European focus for Trump's trade policy," the Height analysts said in a note today. 

The deadline for a decision whether to impose that round of tariffs on imported automobiles and parts is now November, a potential "flash point" with the EU, Height analysts wrote.

--The Associated Press contributed to this report. 

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