US threatens Tariffs on EU Beer, Gin, and Olives

The US has threatened new trade tariffs on beer, chocolate, and olives from the European Union, as part of a long-running row over subsidies to plane maker Airbus.

The US Trade Representative said it was considering duties on 30 products worth $3.1bn (2.5bn) in trade every year.

It has already put 15% to 25% tariffs on $7.5bn worth of other EU goods as part of the dispute.

The EU warned it would damage firms on both side of the Atlantic.

And UK Trade Minister Liz Truss said she was disappointed by the move, warning against the use of "tit-for-tat" tariffs.

The row centres on EU subsidies given to Airbus before 2004, which Washington says created an unfair advantage over the US aircraft manufacturer Boeing.

Last year, the World Trade Organization (WTO) ruled the subsidies were illegal and allowed the US to levy tariffs on EU goods, including aircraft, wines, and cheese.

But it is now considering a parallel case involving illegal support for Boeing, which could see the EU imposing duties later this year.

The US said pastry and cakes, gin, cashmere clothes and hardware products could all be in the firing line for new tariffs, affecting exporters across the continent.

In a statement the EU said Washington was going beyond what was allowed by the WTO.

"It creates uncertainty for companies and inflicts unnecessary economic damage on both sides of the Atlantic," it added.

"This is particularly the case as companies are now trying to overcome the economic difficulties in the aftermath of the Covid-19 crisis."

1.This story raises two major international trade issues. What are they?

2.Give two reasons from the story why retaliatory tariffs are wrong in international trade. Name the remedy allowed under WTO rules for government subsidies?