The threatened US tariffs are in response to subsidies received by aircraft maker Airbus and target a host of European products including helicopters, aircraft parts and cheese.
'The EU is confident that the level of countermeasures on which the notice is based is greatly exaggerated, ' a European Commission source said. "When I see the global growth situation, I do not think we can afford a trade dispute, even in the aviation industry alone, between the United States and Europe". The new tensions may complicate those efforts, which are part of European attempts to ward off American threats of separate duties on foreign autos and vehicle parts.
Meanwhile, the U.S. is still negotiating a trade deal with China amid tit-for-tat tariffs. It excluded aircraft sold to the US military. The final list is expected this summer.
However, market-focused observers have indicated that Airbus, British Airways owner IAG, Rolls-Royce, British aerospace engineering and technology companies Meggitt PLC and QinetiQ, as well as the UK's Associated British Foods and Cranswick and Ireland's Greencore food producers have already faced a 0.4-2 percent tumble in stock prices in Tuesday trading.
". The U.S. wants to pressure the European Union to engage in meaningful trade talks, but without having to apply the more painful measure of automotive tariffs", said Cailin Birch, global economist at The Economist Intelligence Unit.
It began in 2018 when the U.S. started slapping tariffs on the imports of steel and aluminium from a number of countries, including the EU.
The European Union is firing back at the latest tariff threat by the U.S.
Any US tariffs would be imposed on top of existing levies that it applies to the EU.
The E.U. has begun preparations for retaliation, an E.U. official told Reuters Tuesday.
In the U.S. case, it allows the Office of the U.S. Trade Representative to collect public comments on the potential tariffs.
In a ruling published in June 2017, the WTO said the USA had brought 28 of 29 programs into compliance, but agreed with Brussels that Washington had not taken "appropriate steps to remove the adverse effects or. withdraw the subsidy" in the case of Washington state.
The U.S. trade authority released a preliminary list of products to be covered by the additional import duties, including helicopters, passenger and cargo aircraft, fuselages, and other aircraft parts.
The president gave no timetable for the move, which comes amid an escalating trade row after the U.S. initially threatened the tariffs on Monday in response to subsidies received by aircraft maker Airbus.
The latest threat by the White House to slap higher import tariffs on a major trading partner comes after a long-running dispute between the U.S. and the European Union over their state subsidy support for Airbus and Boeing, the world's two biggest civil aerospace firms.