Booze and Boeings: Europe sharpens tariff hit list, ramping up trade war with Trump

Brussels: European leaders are preparing to escalate their trade stoush with US President Donald Trump by targeting American products from bourbon to Boeings if he does not compromise on his latest shock tariffs.

The European Union has a hit list of US exports worth more than $120 billion a year and is negotiating the massive retaliation after Trump stunned the bloc with a 30 per cent tariff on its products.

Bourbon barrels in an ageing warehouse at the James B. Beam distillery in Clermont, Kentucky.Credit: Bloomberg

The trade war contrasts with a peace deal last month on defence, when Trump acclaimed a move by all major NATO members to increase their military spending.

The economic rift is growing wider after Trump chose to scale up his tariffs beyond the 10 per cent rate already being applied, announcing the move last weekend when the EU thought it had a deal on trade in sight.

The president’s move has fuelled concerns that allies who are willing to give ground on trade do not get better outcomes than major powers that retaliate, as China has done with tariffs on American exports.

It is also a factor in Australia’s attempts to reach a free trade agreement with the EU when officials in Brussels must focus on dramatic shifts from the US that could wreck export industries and slow the European economy.

European Commissioner for Trade and Economic Security Maros Sefcovic.Credit: AP

EU Trade Commissioner Maros Sefcovic flew to Washington at short notice this week to try to negotiate a compromise with some of Trump’s top aides, but his talks on Thursday did not appear to produce a deal.

Sefcovic met US Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer, hoping they could convince the president to ease the 30 per cent tariffs before they are supposed to take effect on August 1.

Trump has shifted ground on his deadlines in the past and may do so again on the tariff rate and timing, prompting disagreement among EU members about the scale of their retaliation.

Sefcovic said he would not walk away from a genuine effort to reach a deal, but he signalled a “second strand” in the negotiations about new EU tariffs if necessary.

“As I have said before, it takes two hands to clap,” he said this week.

“We must prepare for all outcomes – including, if necessary, well-considered, proportionate measures to restore balance in our trans-Atlantic relationship.”

The EU drafted a list of American products four weeks ago to consider tariffs on annual US exports worth €95 billion, about $170 billion.

This was cut down to a revised list worth €72 billion, or about $128 billion.

The Boeing manufacturing facility in Renton, Washington.Credit: Bloomberg

The list includes aircraft and aeronautical components, a major threat for Boeing in its competition with European giant Airbus. It also targets bourbon whiskey from states such as Kentucky, where 64.5 per cent of voters chose Trump at the presidential election.

Other products on the list include cars, food, wine, beer and medical devices.

Sefcovic shared the revised list with EU member countries this week, giving them a chance to negotiate changes, but also said he was prepared to do more.

“This does not exhaust our toolbox, and every instrument remains on the table,” he said.

US President Donald Trump stunned Europe when he announced a 30 per cent tariff on its products.Credit: AP

Export powerhouses such as Germany are concerned that retaliatory tariffs would only trigger a reprisal from Trump, who might pile even greater penalties on EU products.

In the vehicle sector, for instance, the EU has more at stake with its exports than with any penalty it could apply on American products.

While the EU shipped 749,170 new cars to the US last year, the US only sent 164,857 cars in the opposite direction.

In the farm sector, France is concerned that retaliation would trigger White House reprisals against French wine and other high-value exports.

The German Association of the Automotive Industry (VDA) said the situation meant an earlier 27.5 per cent tariff on European cars was still in force until a deal was struck.

“The costs for our companies are already in the billions – and the sum is growing every day,” VDA chief Hildegard Muller said in a comment to this masthead.

“With regard to any countermeasures, it must be ensured that they do not damage our own industry.”

Muller said that two-thirds of the cars shipped from the US to the EU came from German companies – a key fact after German brands invested in American factories.

The peak group for Italian wine exporters, the Unione Italiana Vini (UIV), called the Trump tariff plan the “darkest page” in relations between Italy and the US.

UIV president Lamberto Frescobaldi said the 30 per cent tariff on wine would push up prices so much that it was “virtually an embargo” of 80 per cent of the Italian wine exports, costing hundreds of thousands of jobs.

The retaliation is being described in Brussels as a final option if Trump does not give ground on his 30 per cent tariff, but it depends on EU member states holding their nerve.

If some countries fear reprisals from Trump, they may push for carve-outs from the retaliation plan in the hope it would spare their biggest industries from even greater US trade penalties.

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