The European Commission plans to impose a 25% tariff on certain US goods starting May. 16, with more to follow on Dec. 1.

Tariffs will apply to products such as diamonds, eggs, poultry, almonds, and soybeans.

The EU removed items like bourbon, wine, and dairy from the final list to reduce the overall economic impact.

Earlier tariff threats between the US and EU raised concerns in major wine-producing countries like France and Italy.

EU countries will vote on the proposal Apr. 9, while steel and aluminium import restrictions are already underway.

🔗 Source: Reuters

🧠 Food for thought

A. Trade retaliation follows predictable historical patterns

The EU’s targeted counter-tariffs mirror similar retaliatory measures taken during past trade conflicts, showing how trade disputes follow established patterns.

When the US imposed the Smoot-Hawley tariffs in 1930, European countries responded with similar targeted tariffs, resulting in US imports from Europe plummeting from $1.3 billion in 1929 to just $390 million by 1932 1.

This current dispute echoes the 2018 trade tensions when the EU responded to Trump’s first round of steel and aluminum tariffs with retaliatory measures on $3.1 billion worth of US goods, specifically targeting politically sensitive products like bourbon and motorcycles 2.

Historical data shows that retaliatory tariffs typically target products with political significance rather than just economic impact, a strategy evident in the EU’s current approach of selecting diverse products from diamonds to poultry 3.

The two-phase implementation (May and December) follows a similar playbook to the EU’s 2018 response, when they also staggered tariff implementation to maintain negotiating leverage while signaling commitment to action 2.

B. Strategic product selection reveals negotiating leverage and vulnerabilities

The EU’s removal of bourbon, wine, and dairy from its tariff list demonstrates how trade negotiators adjust tactics based on counter-threats and economic vulnerabilities.

Bourbon represents a $9 billion industry in Kentucky with significant political importance in Senate Minority Leader Mitch McConnell’s home state, making it an initially attractive target that the EU ultimately decided to spare after Trump’s counter-threat 4.