The European Union started enforcing tariffs Friday on American imports like 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 worth of U.S. 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 spokesman Alexander Winterstein said the EU's response is proportionate and reasonable.
U.S. & World
Daniel Gros, director for Economy and Finance at the Center for European Policy Studies, said that in a trade war everyone stands to lose, but 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."
Trump imposed tariffs of 25 percent on EU steel and 10 percent 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.
As painful as the brewing trade war could prove, many have seen it coming.
Trump ran for the presidency on a vow to topple seven decades of American policy that had favored ever-freer trade among nations. He charged that a succession of poorly negotiated accords — including the North American Free Trade Agreement and the pact that admitted China into the World Trade Organization — put American manufacturers at an unfair disadvantage and destroyed millions of U.S. factory jobs.
He pledged to impose tariffs on imports from countries that Trump said had exploited the United States. Late last month, Trump proceeded to infuriate U.S. allies — from the EU to Canada and Mexico by imposing tariffs of 25 percent on imported steel and 10 percent on aluminum. The president justified the move by saying imported metals threatened America's national security — a dubious justification that countries have used rarely because it can be so easily abused.
And he is threatening to impose another national security-based tariff on imports of cars, trucks and auto parts.
Trump has also started a trade fight with China over Beijing's sharp-elbowed efforts to overtake U.S. technological dominance. China's tactics range from forcing American companies to hand over technology in exchange for access to the Chinese market to outright cyber-theft.
The White House last week announced plans to slap 25 percent tariffs on 1,100 Chinese goods, worth $50 billion in imports. Trump would start July 6 by taxing $34 billion worth of products and later add tariffs on an additional $16 billion in goods.
The Chinese have said they will respond in kind. Trump said he would then retaliate against any counterpunch from Beijing by targeting an additional $200 billion in Chinese products, and then yet another $200 billion if China refused to back down. All told, the $450 billion in potential tariffs would cover nearly 90 percent of goods China sends to the United States.
The tariffs and threats have begun to take a toll. Steel and aluminum prices, for example, have shot up and supplies have become scarce.
"Steel pricing is usually relatively stable," said Al Rheinnecker, CEO of American Piping Products in Chesterfield, Missouri, which distributes steel pipe to numerous industries. But "since April, you can quote something on Monday, and if the customer doesn't buy it right away, you may have to raise the price on Thursday."
So far, Rheinnecker has managed to pass along the higher costs to his customers. He's not sure how long that will last.
The Commerce Department is allowing companies to request exemptions from the steel and aluminum tariffs — if they can show that the metals they need aren't available from Americans producers. The department expected 4,500 requests. But it's been overwhelmed by more than 20,000. This week, it said it has processed just 98 requests so far, approving 42 and denying 56.
The rising tensions and the chaos surrounding the steel and aluminum tariffs are starting to generate pushback on Capitol Hill. Senators this week grilled Commerce Secretary Wilbur Ross.
"As you consider these tariffs, know that you are taxing American families, you are putting American jobs at risk, and you are destroying markets — both foreign and domestic — for American businesses of all types, sorts and sizes," said Senate Finance Chairman Orrin Hatch, R-Utah.
Economists and trade analysts worry that there may be no way out of an all-out trade war between the United States and its most vital trading partners.
"The president has been so belligerent that it becomes almost impossible for democratically elected leaders — or even a non-democratic leader like (Chinese president) Xi Jinping — to appear to kowtow and give in," said Philip Levy, senior fellow at the Chicago Council on Global Affairs and a former White House trade adviser. "The president has made it very hard for other countries to give him what he wants."