EU slaps tariffs on US as trade war erupts

AFP - The European Union slapped revenge tariffs on iconic US products including bourbon, jeans and motorcycles on Friday in its opening salvo in a trade war with President Donald Trump.

The tariffs, which took effect at midnight (2200 GMT Thursday) according to the EU's official journal, will further fuel jitters on world stock markets that are already alarmed by trade tensions between the United States and China.

Customs agents across the Europe's colossal market of 500 million people will now impose the duty, hiking prices on US-made products in supermarkets and across factory floors.

Brussels imposed the raft of duties on US products worth 2.8 billion euros ($3.3 billion) in a tit-for-tat response to Trump's decision to slap stiff tariffs on European steel and aluminium exports.

EU Trade Commissioner Cecilia Malmstrom said this week that the 28-nation bloc was "left with no other choice" but to impose tariffs of its own after the "unilateral and unjustified decision of the US."

Together with US tariffs against Mexico and Canada, the trade battles have raised the spectre of a global trade war, spooking financial markets that fear major consequences to the global economy.

"We have a trade war -- and it's an escalating trade war," SEB chief economist Robert Bergqvist told AFP in an interview.

Brussels first drew up the list in March when Trump initially floated the 25 percent tariffs on steel imports and 10 percent on aluminium, which also target Canada, Mexico and other close allies.

The list does not specifically name brands but European Commission chief Jean-Claude Juncker spelled out in March that the bloc would target "Harley-Davidson, bourbon and Levi's jeans".

Cranberries, cranberry juice, orange juice, sweetcorn and peanut butter are among the other food products targeted.

The list also hits clothing along with bed linen and men's leather footwear, eye make-up and lipsticks, plus a host of steel products.

- 'Against all logic' -

Juncker said on Thursday that the US decision to impose tariffs "goes against all logic and history".

"Our response must be clear but measured. We will do what we have to do to rebalance and safeguard," he said.

European consumers would be able to find "alternatives", European Commission Vice President for trade Jyrki Katainen said.

"If we chose products like Harley Davidson, peanut butter and bourbon, it's because there are alternatives on the market. We don't want to do anything that would harm consumers," he said on Thursday.

"What's more, these products will have a strong symbolic political impact."

Analyst Bergqvist argued that his "main concern" over a trade war was the impact on stock markets -- and the subsequent knock-on effect for the world economy.

"All these kind of things going on right now could trigger that kind of behaviour and initiate a correction in the stock markets, and that could also trigger a slowdown in the global economy," he said.

- Relations reach new lows -

Transatlantic ties are at their lowest level for many years due to rows over a host of issues including the tariffs, the Paris climate agreement, the Iran nuclear deal and the new US embassy in Jerusalem.

Relations plumbed new depths at the recent G7 summit when Trump abruptly rejected the joint statement and bitterly insulted his Canadian host, Prime Minister Justin Trudeau.

Trump claimed America had been obliged to levy the metals tariffs as it has been exploited as the world's "piggy bank". He is also targeting EU auto imports with a US probe now underway.

Trump's outbursts were the latest in which he has clashed with America's closest allies, even as he has had warm words for autocrats like North Korean leader Kim Jong un, with whom he had a historic meeting last week, and Russia's Vladimir Putin.

But US Assistant Secretary of State for European and Eurasian affairs Wess Mitchell said on Thursday that Trump's approach towards his allies was about "strategic renovation".

"Strengthening the West means making hard decisions today when we initially disagree, rather than continuing to accept the appearance of transatlantic unity for the sake of avoiding disagreement," he told the Carnegie Europe think-tank in Brussels.

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