US Will Impose Tariffs on Europe, Igniting Possible New Trade War

After 15 years of disputing, the World Trade Organization just gave the US the green light to impose tariffs on goods from the European Union.  The dispute stems from subsidies from aircrafts.  The US said Boeing lost millions of dollars due to the EU improperly imposed subsidies on their own aircraft, the Airbus.  It all has come to a head today when the WTO approved of tariffs on $7.5 billion worth of goods from The European Union.

Starting October 18, the following tariffs will take effect:

·         10% on aircrafts from France, Germany, Spain, and the United Kingdom

·         25% on Irish and Scotch whiskey and some textiles from the UK

·         25% on coffee, cheeses, oil and other food items from Germany, Spain and the UK

·         25% on machinery from Germany

The market took a nosedive from this latest announcement, as investors are even more worried about a global recession.  The US and the EU have been clashing for the last decade.  The President believes there is no reason for the EU to retaliate.  However, there are fears that the EU will, and we will see the nation in another tit for tat trade war.  It is believed that the World Trade Organization is reviewing and will make a decision on whether EU will impose their own tariffs.

If this were to happen, we’d see a bigger hit to our economy than with China.  The amount of imports and exports between the US and the European Union is about the same, whereas the exports from China is about three times greater than the imports.  The US is already hurting from the two-year trade war with China.  The European Union’s economy is not faring well either and this trade war could hit hard.  Add in the upcoming exit of Britain from the European Union, both Asian markets and European markets fell.

As reported earlier, the manufacturing sector is falling, and job growth wasn’t as high as originally reported.  Britain will be leaving the European Union by the end of the month.  On a slightly silver lining, rumors are swirling that the Federal Reserve will cut rates again.  This caused the US markets to climb back up into the positive, gaining the day’s loss from the trade war news.