Even as negotiations with China appear to be making progress towards a trade deal, the Trump administration has announced a new flare-up of trade tensions with the EU by announcing new tariffs. On Wednesday, the US government announced 10% tariffs on Airbus aircraft and 25% tariffs on other EU-made goods, including French wine, Italian cheese and Scotch whiskey.

The new tariffs were announced in retaliation to the illegal aircraft subsidies the EU had granted Airbus, as ruled by the WTO recently. The US’s recent tariff hikes will impact $7.5 billion worth of goods imported from the European Union, and could potentially cause the EU to announce retaliatory tariffs as well.

This new round of tariffs are expected to be implemented starting October 18, according to the US Trade Representative Office. The 10% tariffs will impact Airbus aircraft manufactured in France, Britain, Germany and Spain. However, EU-manufactured aircraft components used in Airbus’s Alabama assembly operations or supplied to Boeing will be exempt from the new tariffs.

According to US Trade Representative Robert Lighthizer, “Finally, after 15 years of litigation, the WTO has confirmed that the United States is entitled to impose countermeasures in response to the EU’s illegal subsidies”. However, Lighthizer also expressed optimism that the EU will be willing to resolve this issue via negotiations with the US, the only silver lining so far.