US EU Trade Dispute
U.S. and EU flags are pictured during the visit of Vice President Pence to the European Commission headquarters in Brussels (Photo: Reuters / Francois Lenoir)

The World Trade Organization (WTO) has given the United States the green light to impose its planned tariffs on $7.5 billion worth of European-made goods annually. The tariffs are the country's way of punishing the EU for its illegal aircraft subsidies to Boeing's European rival Airbus.

The new tariffs, which will take effects on October 18, will include a 10 percent levy on all Airbus airplanes and a 10 percent levy on other EU items such as French wines, scotch, cheese, whiskeys, wool, coffee, and tools.

The United States mentioned on Wednesday that the approval has finally settled the 15-year long litigation and should now allow the country to impose just tariffs in response to the EU's illegal subsidies.

Some analysts have stated that the US' tariffs against the EU could spark yet another transatlantic trade war that may result in tit-for-tat measures down the road. This would be very bad news for the United States as it is still in the middle of its own trade war against China, which has already resulted in tariffs on billions of dollars worth of each other's imports.

The US' tariffs will mainly be targeting the four Airbus consortium countries, namely France, Germany, Britain, and Spain. Major exports from the countries, such as British sweaters, Spanish olives, German Tools, and French wines will be slapped by the 25 percent tariffs.

The list did exclude some major export items such as Italian wine, European chocolates, and European olive oil.

US Trade Representative Robert Lighthizer clarified that the tariffs will not include EU-made aircraft parts that will be used in the company's Alabama assembly facilities or those that will be used by Boeing. The agency stated that this should ensure the safety of US manufacturing jobs.

Despite already having a final schedule for the tariffs and the approval from the WTO, Lighthizer had stated that the US will be entering into negotiations with the EU to find a way to resolve the issue without negatively affected US manufacturing and jobs.

The US' planned tariff rate is considerably less than what it had originally intended to slap on the EU. The country originally had a list earlier this year that affected over $25 billion worth of EU goods. The original list had included major aircraft components, seafood, helicopters, and a number of luxury goods.

The move to lessen the already approved retaliatory tariff list has been seen by analysts as a clear move by the US to coax the EU into negotiations. However, the US has warned that it does have the authority to expand its tariff list at any time.