Why the EU Could Hit America With $39.1 Billion in Retaliatory Tariffs

The Trump administration has threatened to raise tariffs on European Union imports of automobiles, and now the EU is ready to retaliate with an extra set of taxes of its own to the tune of $39.1 billion on U.S. goods entering the bloc’s member states.

The tit-for-tat tariff threat is what Cecilia Malmstrom, the European trade commissioner, called a “rebalancing list.” She also told the European Parliament on Tuesday that the list is basically prepared, noting that “I do hope we do not have to use that one.”

It seems that if additional tariffs were to be imposed, that they could occur around November. The timing is a direct response to President Donald Trump’s claim in May that some imported vehicles and parts posed a national security threat, giving him reason to put a 25% tax on cars from the E.U. However, a final decision was put off for six months, which is expected to end around mid-November.

The car taxes aren’t the only battle between the U.S. and the E.U. The two have an ongoing dispute over subsidies connected to E.U. firm Airbus and American firm Boeing. The U.S. is planning to impose about $7 billion in levies on imports from the region as soon as a World Trade Organization arbitrator issues his decision on damages. That decision is expected before the end of this summer, although it could be delayed by a few weeks.

The U.S. in April disclosed an initial list of proposed categories that could face tariffs, such as handbags over $20; sweaters and vests from wool and cashmere from Kashmir goats, as well as apparel items such as men’s and boys’ suits. When the U.S. tariffs are imposed, the E.U. in turn is expected to face retaliatory duties on $22 billion worth of U.S. goods imported to the member states.

Editor’s Note: This story was reported by FN sister magazine Sourcing Journal. For more, visit Sourcingjournal.com.

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