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EU Eyes $12 Billion in Tariffs on US Goods—Including Handbags—Over Row With Boeing

The European Union is considering hitting U.S. goods ranging from handbags to helicopters with retaliatory tariffs to the tune of 10.2 billion euros ($11.5 billion) in a dispute over subsidies to Boeing Co., according to a draft list seen by Bloomberg News.

The plan follows a U.S. threat to seek $11 billion in damages through duties on European goods ranging from helicopters to cheeses to counter state aid to Airbus SE. Both moves stem from parallel, 14-year-old, disputes at the World Trade Organization over market-distorting support for aircraft makers.

The European Commission, the EU’s executive arm, outlined the retaliation plan aimed at politically sensitive U.S. products to trade experts from the bloc’s national governments on Friday in Brussels, an official said on the condition of anonymity because the deliberations were behind closed doors. Another meeting on the matter is scheduled for April 15.

The WTO will ultimately determine the amounts of damages that both sides would be allowed to claim in the two cases. On April 9, the commission dubbed the U.S. projection of $11 billion “greatly exaggerated.”

The renewed transatlantic wrangling over aviation subsidies heightens EU-U.S. trade tensions prompted by President Donald Trump’s “America First” protectionism, especially his controversial duties on foreign steel and aluminum based on national-security grounds and his threat to apply automotive levies on the same basis. It also comes as the two sides are preparing to sit down for negotiations on removing tariffs on industrial goods agreed to last year as part of an effort to forestall the auto tariffs.

New risks

An escalation of transatlantic commercial tensions would in turn add risks to a global economy already suffering from Trump’s bigger trade war with China. In a Twitter post on April 10, Trump called the EU “a brutal trading partner.”

So far, the EU has applied tit-for-tat tariffs on 2.8 billion euros of American goods in response to Trump’s metal duties and threatened to hit a further 20 billion euros of U.S. products with levies should Washington restrict automotive imports.

To counter the threat of U.S. duties on foreign cars and auto parts, commission President Jean-Claude Juncker reached a truce with Trump last July in which both sides pledged to work toward scaling back transatlantic market barriers including tariffs on industrial goods.

EU governments advanced that plan on April 11 when their ambassadors to the bloc gave the go-ahead for European trade chief Cecilia Malmstrom to negotiate cuts in industrial tariffs. The envoys also approved a mandate for her to seek deeper EU-U.S. regulatory cooperation.

Ketchup, tobacco, lobster

The list of U.S. goods on the commission’s draft retaliation list in the Boeing-aid case also includes video-game consoles, fitness equipment, casino game tables, tobacco, vodka, orange juice and a range of foods including chocolate, ketchup and frozen lobster.

The EU imports of the listed goods have a total value of around 20 billion euros and the bloc would eventually apply duties on some or all of the products once the WTO sets the damages limit, according to the official.

These levies, if implemented, would add to the increasing woes of U.S. nut growers. China, a large market for the industry, already put large duties on walnuts, cashews and pistachios as part of its trade dispute with the Trump administration, with some levies hitting 45 percent. The EU is also one of the largest destinations for American-grown nuts.

The U.S. list published on April 8 includes EU goods such as motorcycles, cheese and wine.

The Geneva-based WTO is due to set in the coming months the level of countermeasures that the U.S. would be able to enact and, in late 2019 or in early 2020, to fix the equivalent amount for the EU.