Monday, May 23, 2022

US raises tariffs on EU products following dispute over aircraft subsidies

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Donald Trump’s administration has escalated its long-standing trade dispute with the EU over aircraft subsidies, saying it would increase tariffs on aircraft parts and beverages from France and Germany.

The move was announced by the Office of the U.S. Trade Representative on Wednesday evening and will apply from January 12 – shortly before Joe Biden is sworn in as President of the United States.

USTR said it would increase levies on the grounds that the EU had improperly applied tariffs over $ 4 billion in U.S. goods last month, calculating it based on trade volumes since the outbreak of the coronavirus pandemic this year. The EU measures have been authorized by the World Trade Organization.

Washington said that Brussels therefore imposed duties on “many more products” than it would have if the tariffs had been calculated on the basis of a “normal period”.

The $ 4 billion in tariffs imposed by the EU followed the United States targeting $ 7.5 billion in EU goods from October 2019, which was authorized by the WTO as a sanction for subsidies to European aircraft manufacturer Airbus. EU tariffs, meanwhile, were cleared in response to US subsidies for the benefit of Airbus rival Boeing.

The Trump administration and the EU have said they want resolve the dispute but the two sides failed to reach a deal, which will be one of the biggest tests of Washington-Brussels rapprochement on trade under Biden.

The European Commission has said it regrets the Trump administration’s decision, warning that it “unilaterally disrupts the ongoing negotiations between the commission and the USTR to find a settlement to the protracted air disputes.”

“The EU will engage with the new US administration as soon as possible to continue these negotiations and find a lasting solution to the dispute,” the committee said in a statement Thursday.

Products targeted by higher tariffs in Washington’s latest move include “aircraft parts” as well as “certain non-sparkling wines” and “certain cognacs and other grape brandies.” The higher prices will only apply to French and German products.

The fight for aircraft subsidies simmered for years but intensified sharply during Mr. Trump’s presidency, alongside tensions over digital taxes introduced in the EU, tariffs on metals imposed by the United States and taxes on cars threatened by Washington.

Airbus said the US tariffs were “counterproductive in all respects” and hoped that “Europe will respond appropriately to defend its interests and the interests of all European companies and sectors, including Airbus”.

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