European Union slaps $3.4 billion in reprisal tariffs on USA goods

President Donald Trump and China's President Xi Jinping attend at a state dinner at the Great Hall of the People

GETTYPresident Donald Trump and China's President Xi Jinping attend at a state dinner

But in the current politically charged climate, a trade war is now a reality, as the United States decided in March to adopt an aggressive protectionist policy to correct what the Trump administration believes is a crippling trade deficit between the US and several major trading partners.

The U.S. will start imposing new levies on $34 billion in Chinese goods on July 6, with $16 billion to come later and then up to $400 billion more; China vows immediate tariffs on soybeans and other agricultural products.

Its duties target goods worth $3.3bn (£2.5bn) after the United States imposed tariffs on the bloc's steel and aluminium.

Customs agents across the Europe's colossal market of 500 million people will now impose the duty, hiking prices on US-made products in supermarkets and across factory floors.

From the start of June, the European Union has been hit by tariffs of 25 per cent on steel and 10 per cent on aluminium imports imposed by US President Donald Trump, who has justified the move on the grounds of national security.

Richard Lim, the chief executive of the consultancy Retail Economics, estimated the tariffs could add £200m to the cost of consumer goods in Britain.

"We did not want to be in this position", EU Trade Commissioner Cecilia Malmstrom said in a statement.

In a survey released Wednesday by the European Union Chamber of Commerce in China, almost half of European firms said it had become "more difficult" to do business in the past 12 months.

The EU is not the only affected region.

The remaining USA products valued at 3.6 billion euros will take place at a later stage, either in three years' time or after a positive finding in WTO dispute settlement if that should come sooner.

European consumers would be able to find "alternatives", the European commission vice-president for trade, Jyrki Katainen, said.

The U.S. tariffs hit some $7.5 billion of European products; the EU says that today's measures target almost half that figure, and that it plans to impose a slightly larger block of tariffs later - either in three years, or if/when the WTO rules in its favor.

"If we chose products like Harley Davidson, peanut butter and bourbon, it's because there are alternatives on the market".

"What's more, these products will have a strong symbolic political impact".

Lim said: "This is going to escalate, with the United States especially looking at German cars".

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