— This is the script of CNBC's news report for China's CCTV on October 3, 2019, Thursday.
The World Trade Organization (WTO) has backed a U.S. request to impose tariffs on $7.5 billion of European goods, soon the Office of the U.S. Trade Representative released a list of products it plans to target, which has a wide coverage.
Ranging from aircraft, whiskey, coffee, cheese, frozen meat, butter, yogurt to various garments and blankets, countries, such as UK, France, Germany, Spain will be impacted. As for how much it will imposed, except for aircraft, it is 10%, other goods are 25%. The duties would take effect Oct. 18.
USTR said this annually is by far the largest award in WTO history and itself also views it as a historical victory. EU, who lost in this case, strongly opposed these tariffs.
Cecilia Malmström, European Commissioner, said new U.S. tariffs would be" short-sighted and counterproductive" , she left door open to the EU levying retaliatory duties. The U.S. also heard some voice of opposing imposing duties from home, after this list released, U.S. airlines showed their worries firstly. Delta said imposing tariffs will inflict serious harm on U.S. airlines, the millions of Americans they employ and the traveling public. JetBlue said it will make the low-cost carriers harder to grow and compete.
Based on last year's trade volume, the U.S. was the largest partner for EU exports of goods and the second largest partner for EU imports of goods, with $488b and $319b, respectively. If the duties work, then that signals an escalating trade war between U.S. and EU, worrying U.S. financial markets.
U.S. manufacturing and employment data released recently don't look good, the negative effects of a trade war have been underscored by that. Investors worry that a continuing trade war could drag down global growth and potentially tip the U.S. economy into recession
EU is hard to take any tit-for-tat reaction in short-term under WTO' rules. How will EU deal with that will be a focus of attention.
Clarification: This report has been updated to reflect that the script was for October 3, 2019, Thursday.