WASHINGTON: The European Commission recently made a bold stance saying it wouldn’t take a US border tax lying down. The proposed border could increase tariffs on tomatoes, onions, truffles, dried carrots, pears and peaches imported into the US from the EU. “If somebody is behaving against our interests or against international rules in trade then we have our own mechanisms to react,” Jyrki Katainen, the EU commissioner for trade policy, told the Financial Times in an article published on Monday (13 February).
The EU commissioner believes that the World Trade Organization (WTO) would resist such a border tax which the administration has hinted at a means to fund the Trump adminsitration’s border wall between Mexico. He is also concerned that the move could spark a trade war between the two nations. “We have all the legal arrangements within EU, but we are also part of global arrangements like the WTO and we want to respect the global rule base when it comes to trade,” Katainen told the FT. If the administration goes through with the proposal, European businesses could see up to a 20% increase on import tariffs. Critics say the tax amounts to an unlawful subsidy on domestic goods in breach of the WTO while some Republicans state it abides by WTO rules and is a means to increase investments in the United States.