Last week, the European Union said it would begin imposing tariffs on $4 billion worth of American aircraft, select food and beverages, and other products. Tariffs include a 25% tax on products like chocolate, exercise equipment, and rum and vodka. The action is part of a 16-year trade dispute between Europe and the US.
Back in August, the Office of the US Trade Representative announced that the existing 25% tariffs on many European wines would remain unchanged, making some foreign more expensive and harder to find in the US. Rising wine prices could predict the fate of goods included in the EU's new tariff plan.
đź’Ž Data Digs
Over the past 3 months, Naked Wines, an online wine retailer operating in multiple countries, has increased its average price point by 20.1%. Its count of items has declined by 16.5%.
⚔️ Big Picture
- The US and Europe have been embroiled in an ongoing trade dispute for over a decade.
- Last year, the Trump administration imposed tariffs on roughly $7.5 billion in European exports annually (including European planes, wine, and cheese). The action was “retaliation for what the World Trade Organization ruled were illegal subsidies given to the European airplane maker Airbus, Boeing’s main rival,” the New York Times reports.
- The EU’s new tariff plan was cleared by the World Trade Organization last month after it said Europe could retaliate against the US for years of illegal subsidies given to Boeing.
- The new European tariffs impose a 15% tax on large civilian aircraft and 25% on products including chocolate, frozen orange juice, ketchup, rum and vodka, and video game consoles.
- Meanwhile, European wine prices are rising and quantity is waning in the US. This is due to the trade fight, the existing 25% tariffs on many European wines, and the pandemic's economic impact.
- According to Business Insider, the tariffs have also affected items like Italian cheese, single-malt Scotch whisky, salami, French olives, and German coffee. The goods included in the EU’s new tariff plan could very well see the same fate.
⚡ Get Ahead
Boeing expressed disappointment in the EU's new tariff plan in a statement, citing the effect it will have on European workers, suppliers, and consumers. The tariffs could compel the US to negotiate or, more likely, retaliate with even more tariffs.
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