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Retaliation to Trump actions hits U.S. goods

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President Donald Trump brought the world’s two biggest economies to the brink of a trade war Friday by announcing a 25 percent tariff on up to $50 billion in Chinese imports to take effect July 6. Here’s how it could affect the U.S. economy and consumers. (June 15)
AP

Corrections & Clarifications: An earlier version of this story incorrectly stated the expected price increase for a bottle of Jack Daniel’s. 

Imagine you’re riding an American motorcycle on your way to play cards and drink whiskey with your friends.

For Europeans, that’s about to be a more expensive proposition — and for American companies, it could translate into lower sales and profits.

The European Union on Friday began imposing tariffs on about $3.4 billion of U.S. products, ranging from industrial goods to consumer items and agricultural products.

The move came in response to President Donald Trump’s recent tariffs on imported steel and aluminum — 25 percent and 10 percent, respectively.

The Trump administration has accused Europe of unfair trade practices and called for lower tariffs. European critics have accused Trump of violating international trade rules.

The trade spat is expected to affect the prices paid by European consumers and companies for everything ranging from certain alcoholic drinks to makeup.

Affected products range widely and include orange juice, yachts, kidney beans, cranberries, cigarettes, shorts, garden umbrellas, upholstered seats and illuminated sign parts.

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More: 5 ways U.S. tariffs on steel and aluminum could affect American consumers

Trump isn’t backing down. On Friday, he escalated the trade dispute, threatening a 20 percent tariff on cars imported from Europe, which could cost German automakers BMW, Volkswagen and Daimler more than $5.2 billion, according to Evercore ISI analyst Arndt Ellinghorst.

Will companies pass the extra costs along to consumers or absorb the blow and thus lose profits? That remains to be seen.

Here are several key products to watch:

Whiskey makers: American companies shipped $737 million in bourbon whiskey to European customers in the 12 months ended March 31, according to Panjiva S&P.

Tennessee’s distilled spirits industry is bracing for a big hit during the usually lucrative summer season.

The hike would add about 10 percent to the cost of Lynchburg-distilled Jack Daniel’s in European countries, according to the company.

Unhappy whiskey customers in London will hurt Tennessee coffers, as decreased sales reduce local tax income and threaten jobs, said Kris Tatum, president of the Tennessee Distillers Guild.

Fifty-five percent of U.S. distilled spirits are produced in Tennessee. Much of that comes from locally made, internationally traded brands Jack Daniels, George Dickel, Ole Smoky, and Corsair.

“That (increase) being passed directly to the consumer will hurt revenue,” Tatum said. “If it decreases revenue there, that hurts our state directly. We don’t want anything that’s going to stifle their growth or their revenue. It’s not good for the industry as a whole, especially during peak season. This is not something we want to see.”

Nationwide, there are 1.5 million employees of the distilled spirits industry, according to the Distilled Spirits Council.

“We urge the EU and the U.S. to re-engage as soon as possible to resolve the current situation and prevent needless further escalation,” the Council said Friday in a statement.

Farmers and food makers: The U.S. exported nearly $13 billion in agricultural goods to the EU in 2017, according to the American Farm Bureau Federation.

Cranberries, orange juice and peanut butter are among the key products that will be hit with increased tariffs in Europe.

The Massachusetts-based Cranberry Marketing Committee noted that Canadian cranberry farmers would have an edge on Americans because of their duty-free agreement with Europe.

The “Farm Bureau believes in negotiations, not additional tariffs, to resolve trade issues,” the Farm Bureau told U.S. Senate and House committees in recent statements. “American farmers and ranchers rely heavily on export markets for their business success, especially at this time of reduced farm income. Agriculture needs a growing trade, not a reduced and burdened trade.”

Motorcycles: Milwaukee-based Harley-Davidson is at risk as the EU imposes a 25 percent tariff on motorcycles.

That’s bad news for a company that is already reeling from sluggish interest in motorcycles among millennials. And Harley is also facing increased costs from Trump’s increased steel and aluminum tariffs.

“We support free and fair trade and hope for a quick resolution to this issue,” Harley said in a recent statement. “We believe import tariffs on steel and aluminum will drive up costs for all products made with these raw materials, regardless of their origin.”

Makeup companies: The Personal Care Products Council, which represents global cosmetic companies, has expressed opposition to escalated tariffs.

Eye makeup is particularly at risk, according to Panjiva S&P. U.S. exports of eye make-up to Europe totaled $236 million in the 12 months ended in March. 

“Cosmetics and personal care products companies rely heavily on open markets,” the Personal Care Products Council said last week in a statement. “Vibrant international trade is critical to the strength of our industry and enhances our ability to expand manufacturing and employment, and to create the innovative products that consumers around the world trust and enjoy.”

Contributing: Benjamin Goad of the Tennessean; the Associated Press.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.

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