MNI SOURCES: EU Likely To Hold Off On Tariff Retaliation Vs US

By David Thomas

     BRUSSELS(MNI) - The European Commission is likely to wait for a World Trade

Organization ruling before imposing retaliatory tariffs on the U.S. if President

Donald Trump proceeds with his plan for levies on $7.5bn of EU exports by Oct.

18, partly with an eye to defusing tensions at a time when the U.S. could also

impose tariffs on European cars, EU trade officials told MNI.

     "The Commission considered reacting but it is still likely that we will

wait for the (EU vs) Boeing case to be resolved," one official said. "The EU

wants dialogue but what we don't want is escalation."

     But, if the U.S. goes ahead and imposes tariffs after receiving

authorisation from the WTO on Wednesday, the EU will still "be ready to react"

once the Geneva-based organisation rules on a case lodged by the EU over

Boeing's subsidies at the start of next year, the official said.

     The WTO has already clearly signalled in a 'pre-ruling' some months ago

that both the EU as well as the U.S. were set to win their respective aircraft

cases.

     EU trade ministers have already held an informal discussion on how to react

to the U.S. tariff moves, another official said.

     "They showed little appetite to start using other options so that they

could start imposing sanctions," the official added. "The (EU) line is that when

the time comes member states will do something. In the meantime, we want to

engage with the U.S. and find a reasonable solution."

     Officials point to bigger strategic reasons for this muted reaction to the

U.S. tariff decision, including the emergence of China as a potentially

significant exporter of commercial aircraft.

     "It would not make sense for us to go head to head with the U.S. now when

there is an even bigger competitor coming onto the scene."

     The threat of U.S. car tariffs are also at the back of EU officials' mind.

The U.S. has until November 13 to decide on whether to impose tariffs on EU car

exports.

     "So the strategy is let's be quiet, hope Trump has his tariff fix in the

meantime and calms down," one official said.

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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