Trump hails ‘nice victory’ as EU cheese and whisky makers whine

United States President Donald Trump has heralded a “nice victory” after his country got the green light to place tariffs on European Union goods in a row over EU aircraft subsidies.

Trump said Thursday morning on Twitter that the EU “has for many years treated the USA very badly on Trade due to Tariffs, Trade Barriers, and more. This case going on for years, a nice victory!”

But Wednesday’s decision by the World Trade Organization (WTO) left Scottish whisky makers, French cheese makers and Spanish winemakers fuming as the US tariffs targeted products from countries in the Airbus consortium – which includes the United Kingdom, France, Spain and Germany.

German engineers worried that the row over subsidies granted to the European planemaker was leading to “a table tennis match” over transatlantic tariffs, as France warned of subsequent retaliation by the EU.

The WTO decision gave the US the go-ahead to impose tariffs on $7.5bn worth of EU goods annually in the long-running case.

The dispute darkens the global economic outlook, which already has the cloud of the US-China trade dispute hanging over it. Washington and Beijing have imposed tariffs on hundreds of billions of dollars’ worth of each other’s goods.

‘To react with sanctions’

Following 15 years of litigation, Washington said that it would impose fresh tariffs: a 10 percent import tax on Airbus planes that could hurt orders by US airlines; and 25 percent duties on French wine, Scotch and Irish whiskies, and cheese from across the continent.

The United Kingdom said it was seeking confirmation from the WTO that it had complied with the organisation’s rulings and should not face tariffs.

The Scottish Whisky Association said jobs and investment were at risk from a 25 percent tariff on single-malt whiskies.

“Despite the fact that this dispute is about aircraft subsidies, our sector has been hit hard,” the association’s chief executive, Karen Betts, said in a statement, urging restraint from both sides.

Scotch whisky exports to the US, the industry’s biggest single market, were worth 1 billion pounds ($1.23bn) last year.

“If the American administration rejects the hand that has been held out by France and the European Union, we are preparing ourselves to react with sanctions,” said French Finance Minister Bruno Le Maire.

Meanwhile, Spanish vintners said their wine would cost too much in US stores if tariffs were implemented.

“The tariffs will affect our competitivity [sic],” said a spokesman for CECRV, the association for producers of Spanish wines such as rioja and cava.

Germany’s VDMA engineering association said it was disappointed that the European Commission had not defused the row. “The current situation resembles a table tennis match,” said VDMA trade expert Ulrich Ackermann.

‘Reevaluate these tariffs’

Spanish olives, British woollens, and German tools and coffee were also targeted.

Cheese from nearly every EU country will also be hit with the 25 percent tariffs, but Italian wine and olive oil were spared, along with chocolate from Europe.

“Dairy products are going to be directly hit … we are going to fight for these measures to be delayed,” said Michel Nalet, spokesman for France’s Lactalis Groupe, the world’s largest dairy firm, which makes butter and cheeses under the President label.

Yet there was relief for some who had expected to be drawn into the row but were not.

Shares in European luxury goods, including British fashion brand Burberry – and drinks companies, such as France’s Remy Cointreau – rose on Thursday after the tariffs excluded cognac, champagne and leather goods.

The size and scope of the tariffs were reduced considerably from a $25bn list floated by Washington this year that had included helicopters, major aircraft components, seafood and luxury goods.

One person familiar with the case said the US Trade Representative (USTR) was deliberately not using the full extent of the WTO approval to coax the EU into negotiations. But the USTR also issued a warning.

“The US has the authority to increase the tariffs at any time, or change the products affected. USTR will continually reevaluate these tariffs based on our discussions with the EU,” it said.

Airbus and US firm Boeing, the world’s two largest planemakers, have waged a war of attrition over subsidies at the WTO since 2004. The dispute has tested the trade policeman’s influence and is expected to set the tone for competition from would-be rivals such as China.