European Union Hits United States With Tariffs On Tobacco, Nuts - Modern Farmer

European Union Hits United States With Tariffs On Tobacco, Nuts

It will affect agriculture exports.

The EU imports the second-most American tobacco of anywhere in the world.
Photography by Denton Rumsey on Shutterstock

The European Union is set to impose new tariffs on a list of American goods this week, including a number of agricultural products. 

In response to a fight over how much aid is given to airplane manufacturers, the EU had indicated about a month ago that it would seek approval from the World Trade Organization for retaliatory tariffs against the United States. The new tariffs will include a 25 percent tax on American agricultural goods; on that list are, according to the Wall Street Journal, “tobacco, nuts and seeds, spirits, sauces, soups and syrups, self-propelled shovel loaders, tractors and proteins.” 

For well over a decade, there have been two major competing aircraft manufacturers: Boeing, based in the United States, and Airbus, which has different branches based in several different European countries. Starting a few years back, American airline companies, including Delta and JetBlue, started purchasing (or announcing they would purchase) a lot of Airbus planes. This freaked out Boeing, which is a large and influential enough company that it also freaked out the United States government. 

So in mid-2019, the United States sought and received permission from the World Trade Organization to institute tariffs on Airbus planes, designed to make them expensive enough that those American airlines would opt for Boeing instead. Airbus’s most popular model, the A320, costs about $100 million.

The EU, seeing this as protectionist and harmful to Airbus, sought to impose their own tariffs on the US, which the WTO just approved. The American tariff on Airbus came in at around $7.5 billion worth of expected product sales; the European tariff is smaller, at just under $4 billion. But that’s not exactly a minor tariff either.

As you’d expect, Boeing airplanes are at the top of the list of products hit with a new European tariff; they’ll be hit with a 15 percent tax. But that accounts for less than half of the total of these new tariffs. 

The EU is the second largest importer of American tobacco in the world. The US is also one of the world’s largest producers and exporters of tractors, hard liquor, and by far the largest exporter of many nuts, including almonds. 

Though none of the trade war has really been about agriculture, American agriculture has been seen by the EU and by China as a particularly vulnerable sector to hit, both for its importance to the American economy and because farmers are generally seen as part of President Donald Trump’s base. The Trump administration has funneled record amounts of money into the agriculture industry this year, largely due to the strain the trade wars and COVID-19 have created.

ABC News suggests that the EU leaders are optimistic that President-Elect Joe Biden’s incoming administration will be more amenable to ending the trade wars than the current administration, but with American Airbus tariffs already in place, they felt it had no choice but to institute tariffs of their own.

 

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Chris 123
6 days ago

Really unfortunate that a dispute over aircraft manufacturing is creating hardship for totally unrelated businesses.

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