The European Union is preparing retaliatory tit-for-tat tariffs on a number of well-known U.S. brands and products in response to President Trump’s moves to impose tariffs on aluminum and steel imports from other countries.
A list tallied by the European Commission indicates a 25 percent levy on multiple U.S. goods, Bloomberg reported Tuesday. The tariffs will impact upwards of 2.8 billion euros ($3.5 billion) in U.S. exports, including agricultural and steel products. Motorcycles and blue jeans are also among the items included. The range of goods listed will disproportionately hit parts of the United States with strong manufacturing centers, including the Rust Belt and larger Midwest and Appalachia regions.
“These tariffs right now are just talk, but they have the potential to become quite inflammatory and impact economic growth,” Kristina Hooper, chief global market strategist at Invesco, told Bloomberg Television. “Tariffs beget more tariffs. It’s like putting bacteria in a petri dish.”
Trump announced last week that he would seek to impose high tariffs on steel and aluminum of 25 percent and 10 percent, respectively. The threats sparked outcry from Canada — the top supplier of steel to the United States — and led experts to worry a trade war might be imminent, to say nothing of the demise of North American Free Trade Agreement (NAFTA) renegotiation talks, which are ongoing. Trump fired back, arguing on Twitter that “trade wars are good, and easy to win” while bemoaning U.S. deficits.
But Canada isn’t the only country the United States has to worry about. European countries expressed concern following Trump’s announcement, with European automakers in particular urging the president to reconsider. International Monetary Fund (IMF) and World Trade Organization (WTO) officials criticized the decision, while a number of business leaders called for calm.
“I’m suggesting that we stop playing tit-for-tat, that we get our blood pressure to go back down to normal (and) that we sit down at the table and find a way to resolve this issue,” said Fiat Chrysler CEO Sergio Marchionne on Tuesday. “I don’t think we have to escalate this into a full-blown trade war.”
But European Commission President Jean-Claude Juncker made it clear that any U.S. tariffs would be met with similar force.
“If the Americans impose tariffs on steel and aluminum, then we must treat American products the same way,” Juncker said last Friday following Trump’s initial announcement. “We must show that we can also take measures. This cannot be a unilateral transatlantic action by the Americans,” he said. “I’m not saying we have to shoot back, but we must take action.”
Now it seems Europe is moving forward with tit-for-tat retaliation tariffs seemingly targeted to impact U.S. businesses. That reality isn’t lost on lawmakers, including members of the president’s own party. Bourbon, from Majority Leader Mitch McConnell’s state of Kentucky, is among the products named. Many Harley Davidson motorcycles, meanwhile, are assembled in Speaker of the House Paul Ryan’s home, Wisconsin.
In a statement released Monday — prior to news of the E.U. retaliatory tariffs — Ryan criticized Trump’s plans.
“We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan,” a spokesperson for the Speaker said in a statement. “The new tax reform law has boosted the economy and we certainly don’t want to jeopardize those gains.”
A number of other conservative lawmakers have also expressed concern, including another top-ranking Republican, Senate Majority Whip John Cornyn (TX).
“This is not a real estate transaction. While you could maybe walk away from a real estate transaction, we really can’t walk away from these trade agreements without jeopardizing the economy,” Cornyn argued on Monday.
Republicans have reportedly been meeting with Trump in an effort to dissuade the president from moving forward with proposed tariffs. In the meantime, various industries are already taking a hit from the White House’s economic rhetoric. Trump’s repeated attacks on NAFTA are already impacting U.S. agriculture and farmers, as Mexico turns away from the United States and towards a more appealing trading partner, Brazil. They aren’t alone. Mining organizations have expressed concern that the president’s proposed steel tariffs could be bad for another industry Trump has historically touted: coal.
UPDATE: On Wednesday, officials in Brussels confirmed that they had drawn up a list of items on which the European Union planned to levy tariffs.
“Certain types of bourbon are on the list, as are other items such as peanut butter, cranberries, orange juice. Very soon that list will be public, so you will be able to plan your whiskey drinking,” Brussels trade commissioner Cecilia Malmstrom said.
The list itself is extensive and includes the items Malmstrom mentioned — bourbon, peanut butter, cranberries, orange juice — as well as dozens of other items. According to Politico, which obtained a copy of the list, the EU also plans to levy tariffs on items such as various types of steel (flat-rolled, steel rods, cast iron tubes and piping, door/window frames, scaffolding equipment, hardware, baking and cooking appliances), certain kinds of cotton clothing and footwear, lipstick, eye makeup, manicure and pedicure goods, boats, motorcycles, canoes, yachts, as well as a range of agricultural products. Those agricultural products include rice, kidney beans, sweetcorn, cigars, cigarettes, and tobacco, among other things.