China to EU, the US tariff game continues

With the Office of the United States Trade Representative threatening to impose new tariffs on $4 billion worth of European Union goods, the trade conflict between the US and the EU has intensified. And if the US makes good the threat it issued on July 1, the additional tariffs would cover $25 billion of EU goods - in April the US had decided to impose additional tariffs on $21 billion of EU products. In addition, the US administration launched a Section 301 investigation against the digital service tax of France on July 10.

Washington's move seems to have roots in the 15-year-old dispute over the subsidies given to Boeing by the US and to Airbus by the EU. The US is using tariffs to exert pressure on the EU to reduce subsidies to Airbus so Boeing can maintain its competitiveness in the global market and the jobs in the US plane manufacturing industry could be protected.

The US is wielding tariff as weapon also to increase its bargaining chips in the negotiations over "three zeros" - zero tariff, zero tariff barriers and zero subsidy - for non-auto industrial products.