On Tuesday, the European bloc threatened to prepare its own tariffs against the US for allegedly providing illegal subsidies to Boeing, one day after the USA proposed to impose tariffs worth $11 billion on a slew of European goods, a direct retaliation for the EU's alleged illegal subsidies to Airbus.
US President Donald Trump meanwhile threatened last month to impose tariffs on automobiles imported from the European Union, if both sides can not reach a trade deal.
Critics of Trump's tariffs policy point out that tariffs are paid by the consumer, meaning that USA importers will generally have to pay higher prices for goods imported from the European Union rather than these costs being paid by the exporter.
"It will soon stop!" he wrote.
The Trump administration announced the additional levies on EU goods - including roquefort and stilton cheese, wine and aircraft parts - as a response to subsidies for Airbus, the European aerospace and defence group, which it said were harmful to the US. The amount is now subject to an arbitration at the WTO which is expected to deliver a verdict in the summer.
The EU has begun preparations to retaliate over Boeing subsidies, an EU official said on Tuesday (9 April), a day after Washington listed EU products it plans to hit with tariffs in their aircraft dispute.
"The EU remains open for discussions with the United States, provided these are without preconditions and aim at a fair outcome", the spokesperson added.
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The two sides have been locked in a years-long global trade dispute over mutual claims of illegal aid to plane giants, Netherlands-based Airbus and US -based Boeing, to gain advantage in the world jet business. Some auto manufacturers, including Toyota's Jim Lentz, have warned that it could reconsider up to $750 million in USA investments in five Southern states if the tariff talks aren't resolved.
It began in 2018 when the U.S. started slapping tariffs on the imports of steel and aluminium from a number of countries, including the EU.
"The Commission is starting preparations so that the European Union can promptly take action based on the arbitrator's decision on retaliation rights in this (Boeing) case", a Commission spokesman said, according to Reuters.
In response to the USTR move, the European Union is reportedly preparing counter-measures against Boeing and its USA subsidies.
Economists say the Trump team appears to want to use the ruling not merely to help Boeing but to heighten pressure on trading partners like Germany with which the US has a trade deficit.
The U.S. and EU have since July been negotiating how to scale back the tariffs, with Trump holding out the bigger threat of slapping tariffs on European cars - a huge industry in the region - should the negotiations not yield a result. "The figure quoted by USTR is based on USA internal estimates that have not been awarded by the WTO". In a separate case, the WTO has also ruled that Boeing got a small amount of illegal support from the state of Washington worth some $100 million a year.