EU retaliatory tariffs on U.S. goods go into effect

The European Union started enforcing tariffs Friday on U.S. imports, such asbourbon, peanut butter and orange juicepart of a growing global trade rift that's likely to intensify over the next few weeks.

The EU tariffs on $3.4 billion US worth of American 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 spokespersonAlexander Winterstein said the EU's response is proportionate and reasonable.

Trump respondedon Friday with a tweet threateningadditional duties on "all their cars coming into the U.S." if the EU doesn't lift its tariffs.

The German Association of the Automotive Industry countered by warning that"a further escalation of the trade dispute helps nobody."

It says in a statement: "The German auto industry calls for continued talks with the United States, despite the current difficult situation, in order to strengthen trans-Atlantic relations and solve existing problems."

It adds that a trans-Atlantic agreement that conforms to the rules of the World Trade Organization "could be a possible pathway."

Daniel Gros, director for economy and finance at the Centre for European Policy Studies,saidthat whileeveryone stands to lose, 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."

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Trump imposed tariffs of 25 per cent on EU steel and 10 per cent 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 billionin Chinese goods. Beijing has vowed to immediately retaliate with its own tariffs on U.S. soybeans and other farm products.