No cheers for booze or jets as US sanctions hit EU

Last Updated 18 October 2019, 12:31 IST

With Washington starting to apply swingeing tariffs on a record $7.5 billion of European goods from cheese and wine to aircraft and clothing, AFP assesses the main sectors affected.

According to Eurostat, the total EU exports to the United States last year hit 320 billion euros ($355 billion). Rates will be applied differently across sectors -- ranging from ten per cent for the aeronautical industry to 25 per cent for foodstuff and textiles as well as German industrial products.

After the US retaliated over state subsidies for Airbus the sector will be hit by ten per cent tariffs applicable to planes constructed in Toulouse, France, and Hamburg, Germany, but not to sub-constructors.

Aeronautical exports to the US were worth 3.16 billion euros last year according to German economic research centre IfW Kiel -- although the projected total value of 2020 sales of Airbus jets remains much higher at $120 billion.

"If there is a trade war... we'll end up with two regional monopolies -- Boeing in America and Airbus in Europe," said one European industry source, as tariffs would hit their respective competitiveness.

The source added that the US would apply $190 million of import duties on French-made jets.

An EU source indicated Brussels saw "no alternative" to retaliatory measures.

Washington says long-standing European government subsidies for Airbus harm US aviation giant Boeing.

A new 25 per cent tariff is being applied to non-sparkling wine -- mainly French and Spanish but also German and British -- with less than 14 per cent alcohol content and in less than two-litre bottles

Those who prefer to quaff champagne will not see a price rise after the US action, the largest arbitration award in WTO history.

French sales of wine to the US market, which accounts for about a fifth of French output, were worth around a billion euros last year.

The French federation of wine growers on Friday called on the government to "put in place immediately necessary support measures" to help the industry, citing a "major risk" the tariffs presented to it.

Spain will also be affected -- last year it exported 240 million euros of wine to the US -- as will Germany, which exported 180 million in white wines and spirits.

Italy, which is not in the Airbus consortium, escapes sanctions -- its exports to the US were worth 1.5 billion euros last year.

US fans of single malt Scotch whisky will see a 25 per cent tariff hit the sector's biggest market which experts say was worth more than $460 million last year, representing a third of the overall whisky market, according to the Scottish Whisky Association.

Targeting single malts "will disproportionately impact smaller producers," says Karen Betts, SWA chief executive, foreseeing a 20 per cent slide in exports to the US.

The SWA has estimated the sector will alone account for three-fifths of the total tariffs which Britain faces.

French world number two producer of spirits Pernod Ricard deplored the "significant impact" the move on malts would have on its own Glenlivet brand but also on its Campo Viejo Spanish wines.

A range of cheeses will be hit from cheddar to stilton, parmesan, various brands of goats cheese and blue cheeses - albeit pungent French Roquefort has an exemption.

French authorities say the overall effect of the 25 per cent tariff on French cheeses will be insignificant but around half of the Dutch imports, worth 80 million euros last year, will be affected, The Hague says.

Spanish olive oil also faces the 25 per cent tariff which will apply to fruits including oranges, lemons and cherries as well as a range of other foodstuffs such as olives, cold meats and sausages, British biscuits, German waffles and coffee exports from Germany.

Spain exported 405 million euros worth of olive oil to the US in 2018 and the sector employs 400,000 workers. Olive exports added 179 million euros.

Around half of Spanish foodstuffs exports to the US are to be affected -- worth around $1 billion.

Italy, whose olive oil exports are comparable with those of Spain at 436 million euros, will escape tariffs. Around 500 million of its total four billion foodstuff exports to the priority export market the US represents will be affected, however.

Although automobiles escape, the sanctions will hit a raft of German industrial products from electronic doors to diggers as well as photo lenses, all to be slapped with 25 per cent tariffs.

The United Kingdom alone will be hit by a 25 per cent tariff on tens of millions of euros worth of items including wool and cachmere pullovers, anoraks and other products from women's pyjamas to men's suits and bedding.

(Published 18 October 2019, 12:31 IST)

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