EU retaliatory tariffs on U.S. goods go into effect

The European Union began enforcing $3.4 billion US in tariffs on U.S. products on Friday in retaliation to duties the Trump administration has put on European steel and aluminum.

Trump threatens more duties after bourbon, peanut butter targeted

The European Union is targeting U.S. products such as bourbon with retaliatory tariffs in response to the Trump administration going after European steel and aluminum. (Bruce Schreiner/Associated Press)

The European Union started enforcing tariffs Friday on U.S. imports, such as bourbon, peanut butter and orange juice — part of a growing global trade rift that's likely to intensify over the next few weeks.

The EU tariffs on $3.4 billion US worth of American products are in retaliation for duties the Trump administration has imposed on European steel and aluminum.

The EU trade commissioner has acknowledged that the EU targeted some iconic American items to put political pressure on U.S. President Donald Trump and senior U.S. politicians. European Commission spokesperson Alexander Winterstein said the EU's response is proportionate and reasonable.

Trump responded on Friday with a tweet threatening additional duties on "all their cars coming into the U.S." if the EU doesn't lift its tariffs.

The German Association of the Automotive Industry countered by warning that "a further escalation of the trade dispute helps nobody."

It says in a statement: "The German auto industry calls for continued talks with the United States, despite the current difficult situation, in order to strengthen trans-Atlantic relations and solve existing problems."

It adds that a trans-Atlantic agreement that conforms to the rules of the World Trade Organization "could be a possible pathway."

Daniel Gros, director for economy and finance at the Centre for European Policy Studies, said that while everyone stands to lose, the U.S. has put itself in a worse position.

"I think the United States is losing more because it has put tariffs on a very important input which very often it doesn't produce itself," he said. "The EU perhaps will find a few disgruntled consumers who have to pay more for their Harley Davidsons, but that is not a big loss for us."

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Trump imposed tariffs of 25 per cent on EU steel and 10 per cent on aluminum on June 1. Europeans claim that breaks global trade rules.

The spat is part of a wider tussle over global trade. In two weeks, the United States will start taxing $34 billion in Chinese goods. Beijing has vowed to immediately retaliate with its own tariffs on U.S. soybeans and other farm products.