Upon receiving a green light from WTO, the U.S. has announced tariffs on the EU as punishment for the illegal aircraft subsidies. For retaliation, the EU also plans to impose tariffs on U.S. products.
Amid the growing tensions of the President’s Impeachment and heated war between Donald Trump and Joe Biden, Washington has decided to impose 10% tariffs on European made Airbus planes and 25% duties on goods like French wine, scotch, and Irish whiskeys and cheese from all the European countries as a punishment for the illegal EU aircraft subsidies.

Washington has been fighting over the issue in the World Trade Organisation for long. The above announcement by Trump administration comes after receiving a green signal from WTO.
Washington would be imposing the newly sanctioned tariffs on $7.5 billion worth of EU goods. The underlying imposition seems threatening as it could trigger a Tit-for-Tat Trade war between the U.S. and the EU.
Disastrous Trade Wars
On Wednesday, Wall Street’s main indexes underwent their sharpest one-day declines of the last six weeks. This fall came after employment and manufacturing data reported that the U.S. economy was taking an increasing toll due to the U.S.-China trade war.
In recent weeks, Washington and Beijing have both shown intent to ease their ongoing trade war through tariffs and sanctions on $100 billion worth of goods made by each other. China and the USA have been involved in a trade war for more than a year now, which has finally begun to depict some signs of concluding.

However, the trade war between the U.S. and the EU is just beginning to fire up. Washington’s decision to impose heavy tariffs on EU is based upon their recent experiences with China and Japan. They used the tariff strategy against both countries as well. It caused Japan to open their agricultural market to U.S. products and brought China to the negotiation table after long and serious retaliation.
USA vs EU
Airbus and Boeing are the world’s two largest aircraft-makers. Both companies have been involved in a war of attrition over subsidies at the WTO since 2004. A dispute that has tested the WTO’s influence.

The WTO has already confirmed that both Airbus and Boeing received billions of dollars of illegal subsidies. The global trade administrative body is due to decide the level of annual tariffs the EU can impose on U.S. imports. Thought the decision from WTO would come early next year, U.S. airlines that buy Airbus aircraft have urged the government to not hit such industries which can bring collateral damage to the U.S. economy.
Imposing tariffs on aircraft that U.S. companies have already committed to will inflict serious harm on U.S. airlines, the millions of Americans they employ and the traveling public”.
Delta Airlines, U.S.
European manufacturers have been facing tariffs on steel and aluminum already. Alongside a threat from U.S. President Donald Trump to penalize EU cars and car parts. The EU turned to retaliation to protest as their pan European STOXX 600 index finished down 2.7%. The worst decline since December 2018. Airbus shares also fell down by 2%.
Would the U.S. and EU be able to avoid this trade war through negotiations remains to be seen? Else, how this Trade-War fares in the coming weeks would surely be a topic of great interest for the economists across the world. However, the safest bets state that impact would be savage to the cross-Atlantic economies.
