EU flags
FILE PHOTO: European Union flags fly outside the European Commission headquarters in Brussels, Belgium, March 6, 2019. (Photo: REUTERS/Yves Herman/File Photo)

The European Union threatened the United States that they will impose tariffs on United States goods including cheese, ketchup, and fish over the long-running dispute subsides for aircraft. On Wednesday, the bloc released a list of American products which is estimated around $20 billion that could be targeted for tariffs over subsidies given to Boeing.

The bloc's move followed the actions of the United States when they threatened to impose tariffs on European Union imports worth as much as $11 billion over subsidies for regional planemaker Airbus.

The European Union said on Wednesday that they don't have a plan to escalate the trade friction. Cecilia Malmström, Europe's top trade official, said in a statement that while we need to be ready with countermeasures in case there is no other way out, I still believe that dialogue is what should prevail.

According to the European Commission's spokesperson, any retaliatory action would hit a smaller subsection of goods while on the broad target list represents the United States worth $20 billion.

According to the estimate of the European Union in 2012, the damage from Boeing subsidies was roughly $12 billion. it is expected that the tariffs would have limited economic impact if imposed while the tariffs carry political weight.

The chief economist at Berenberg bank, Holder Schmieding, said that the tariffs threatened by the United States and the European Union would not hurt the global economic outlook by much.

The conflict between the European Union and the United States fought over aircraft subsidies for 15 years. In 2004, the European Authorities said that the United States provided an unfair subsidy to Boeing amounting to $19 billion from federal and state government between 1989 and 2006. The United States countered the argument of the bloc with a similar claim over subsidies to Airbus.

The World Trade Organization released favorable rulings to both sides which underscored the complexity of the arguments. According to both sides, their argument over Airbus is unrelated to other trade disputes. The threats came at a sensitive time for transatlantic trade.

On Monday, the European Union decided to restart the trade negotiations with the United States despite the strong objections from French President Emmanuel Macron.

According to the bloc, agriculture won't be a part of the talks despite the urge of the United States. Annually, the trade between the United States and the European Union is worth more than $1 trillion. Europe exports more goods to the United States compared to the rest of the world.