Washington prepares to place tariffs on $3.1bn of EU exports

On Tuesday evening, the US Trade Representative said it wanted to slap tariffs of as much as 100% on exports of olives, beer, gin and trucks, while hiking already-existing duties on aircraft, cheese or yoghurt.

Last October, the World Health Organisation ruled in favour of the US in a case on illegal launch subsidies for Airbus jets.

Thus far, the US had only placed tariffs on goods worth roughly half that value but had pursued a so-called 'carousel strategy', alternating tariffs among different kinds of goods and setting different amounts of tariffs in order to cause the greatest disruption possible.

The decision came ahead of an expected ruling from the WTO on another case involving illegal subsidies for aerospace, this time Washington's financial help for Boeing.

Just the day before, analysts at Morgan Stanley said that EU retaliation was unlikely as "this would risk counter-tariffs from the US and possibly a continuation of such reciprocal actions affecting financial conditions, economic confidence, and activity, especially if the US were to raise tariffs on the car industry, an idea proposed in the past."

Instead, the investment bank believed that Brussels would wait until after the November elections in the US.

Nonetheless, Morgan Stanley also said that "action" on EU-US trade was less likely than on US-China trade, with the latter probably entailing non-tariff barriers.

According to the White House's top trade representative, Robert Lighthizer, his aim was to dissuade retaliation by the European Union and to press it to negotiate a settlement.

The US and Europe were also increasingly at odds over plans in many European capitals to end tax discrimination in favour of US technology multinationals operating in their countries.

The new US tariffs would be subject to a month-long consultation process ending on 26 July before kicking into effect.