The new tariffs, in effect Tuesday, come after negotiations failed to resolve a 16-year dispute over EU aviation subsidies.
The U.S. government said it would begin collecting new taxes on aircraft parts and other products from France and Germany from Tuesday after failing to resolve a 16-year dispute over subsidies to planes with the European Union.
In a notice to shippers late Monday, U.S. Customs and Border Protection said the new duties would apply amid the long-running battle over government subsidies to European Airbus SE and its U.S. rival, Boeing Co .
The notice follows an announcement by the Office of the United States Trade Representative (USTR) that it would impose an additional 15% tariff on aircraft parts, including fuselage and wing assemblies, and a duty of 25% on certain wines.
Discussions between Washington and Brussels to end the battle have stalled in the final weeks of the Trump administration, a European source familiar with the matter told Reuters news agency. Washington had also pushed for a separate solution with the UK, which has a stake in Airbus, but has left the EU.
Brussels has said it will seek an early resolution of the issue with US President-elect Joe Biden, who takes office on January 20. called for closer transatlantic relations and an end to Trump’s “artificial trade war” with Europe.
Washington and Brussels have won lawsuits at the World Trade Organization (WTO), the first to impose tariffs on 7.5 billion dollars of EU products and the second additional duties on 4 billion dollars in imports from the United States.
“ Counterproductive ” tariffs
Airbus said widening USTR tariffs to include components for aircraft made in France and Germany was “counterproductive” and would end up hurting American workers at its site in Mobile, Alabama, where it assembles A320 and A220 aircraft.
The measure will affect the production of the A320 which uses components from France and Germany, unlike the production of the A220, according to an Airbus spokesperson. Airbus delivered more than 40 A320 Family aircraft to Mobile in 2020, but the number will be lower this year due to the pandemic, a spokesperson said.
The initial effects can be mitigated as aerospace companies typically source large components such as wings and fuselages well in advance to ensure smooth production flows.
The planes were already covered by U.S. tariffs, but the addition of components closed a loophole that had allowed Airbus planes assembled in Mobile to be sold in the United States duty-free. Unless the issue is resolved quickly, these devices are unlikely to be competitive in the US market.
Some alcohol from Airbus producing countries – France, Germany, Spain and the United Kingdom – had already been subject to customs tariffs, but new varieties are now affected. The French federation of wine exporters called it a blow.
Unlike previous short-notice tariff actions, the USTR did not grant any exclusions for products already in transit or “on the water,” said Ben Aneff, president of the US Wine Trade Alliance, calling the decision “Deeply unfair”.
Aneff urged U.S. Trade Representative Robert Lighthizer in a letter Monday to change the exemption measure for goods in transit when the tariffs were announced less than two weeks ago on December 30, noting that the sea transit can take 22-40 days.
Aneff said the move would hit many U.S. hospitality, restaurant and wine businesses with significantly higher costs at a time when they were already hit by closures linked to a pandemic.
The dispute dates back to 2004, when the United States filed a WTO complaint against the EU for state support for Airbus by its members. The EU responded a year later with its own complaint that the US had unfairly subsidized the development of Boeing aircraft.