Bourbon and Levi's prices to rise as EU enforces tariffs on US

Retaliatory measure will add up to £200m per year to cost of consumer goods arriving in UK

The price of bourbon whiskey, Levi’s jeans and Harley-Davidson motorbikes imported from the US will gradually begin rising for British consumers, after the European Union’s retaliatory tariffs on American products came into force.

Adding as much as £200m per year to the cost of consumer goods arriving in Britain from the US, the measures came after Donald Trump imposed additional tariffs on imports of steel and aluminium shipped from the EU.

Brussels imposed the tariffs on consumer goods – designed to target producers in Republican states where Trump draws much of his support – from 10pm on Thursday on US goods worth up to €2.8bn (£2.5bn).

The White House refused to exempt its traditional allies from worldwide tariffs on steel and aluminium, which Trump argues are necessary to protect US jobs and industry.

The president is also threatening China with tariffs worth up to $200bn over alleged “unfair” trading practices, amid increasing global tensions that could spiral into a full-scale trade war.

The EU trade commissioner, Cecilia Malmström, said this week the 28-nation bloc was left with no other choice but to impose tariffs of its own after the “unilateral and unjustified decision of the US”.

Brussels initially drew up the list of products in March when Trump first floated the idea of 25% tariffs on steel and 10% on aluminium.

Although American goods already in the UK will not increase in price, shipments leaving the US for Europe from Friday onwards will be charged the tariffs.

Customs agents across the EU internal market of 500 million people will impose the duty, hiking prices on US-made products in supermarkets and across factory floors.

While the EU tax on imported goods in the UK will be collected by HMRC, with some of those duties staying within the country, the cost for importers, such as wholesale firms and supermarkets, will rise – and is likely to be passed on to consumers.

Richard Lim, the chief executive of the consultancy Retail Economics, estimated the tariffs could add £200m to the cost of consumer goods in Britain.

“Though the immediate effects on UK retailers might look relatively modest, it is worth paying close attention to this dispute because it’s future course is unpredictable, fast moving and could quickly escalate to engulf other, seemingly unrelated areas of trade,” he said.

In 2017, consumers in the UK spent about £406bn on retail purchases.

Most economists say the consequence of higher international import tariffs will drive up costs for consumers, offsetting much of the benefit of protecting domestic industries for the country imposing them.

Analysts at the consultancy Oxford Economics said the consequences for the European economy could be contained in the short term, as the affected imports only account for about 1% of all goods coming into the EU from the US. The EU will impose an additional €3.6bn of tariffs if the dispute is still active in three years’ time.

European consumers would be able to find “alternatives”, the European commission vice-president for trade, Jyrki Katainen, said.

“If we chose products like Harley-Davidson, peanut butter and bourbon, it’s because there are alternatives on the market. We don’t want to do anything that would harm consumers,” he said. “What’s more, these products will have a strong symbolic political impact.”

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The real threat would be that the tariffs are a stepping stone towards further escalation in the standoff between Brussels and Washington. Oxford Economics said the consequences could be much greater if Trump imposed tariffs on cars, which leaders from both American and European car manufacturers have said would lead to net job losses in the US.

Lim said: “This is going to escalate, with the US especially looking at German cars. That’s got potential to spiral out of control.”

What US products will be hit by the tariffs?