In response to a recent World Trade Organization (WTO) decision that allowed the U.S. to impose retaliatory import tariffs on $7.5 billion of EU goods, the Office of the U.S. Trade Representative (USTR) will raise the duty on imported EU aircraft from 10% to 15%, effective March 18.
The WTO first authorized the U.S. tariffs in an Oct. 2 decision involving a dispute over subsidies that various European countries provide to commercial aircraft manufacturer Airbus. The U.S. responded on Oct. 18 by implementing tariffs across a range of EU products, including alcoholic beverages, cheeses and kitchen cutlery. The tariffs range from 10% to 25%, depending on the product.
“The United States remains open to a negotiated settlement that addresses current and future subsidies to Airbus provided by the EU and certain current and former member states,” USTR said in a Federal Register notice expected to be published this week.
Airbus (OTCMKTS: EADSY) said in a statement on Saturday that it “deeply regrets USTR’s decision to raise tariffs on aircraft imported from the EU,” adding the action “further escalates trade tensions between the US and the EU, thereby creating more instability for U.S. airlines that are already suffering from a shortage of aircraft.”
Airbus warned that the EU is expected to receive authorization from the WTO to impose tariffs against imports of Boeing planes, such as the 737Max, 787 and 777 series, in May or June, further escalating the U.S.-EU trade war. Boeing (NYSE: BA) is struggling to recover from widespread safety issues involving its new 737Max aircraft.
The Distilled Spirits Council of the United States (DISCUS) urged the U.S. and EU to “de-escalate this trade dispute by simultaneously removing the U.S. tariffs on EU beverage alcohol products and the EU’s tariff on American whiskey.”
The U.S. imposed a 25% tariff on various European whiskeys on Oct. 18. However, since June 22, 2018, the EU has had a 25% retaliatory tariff on imports of American whiskey in response to U.S. tariffs on aluminum and steel. The EU is scheduled to increase its tariff on American whiskey imports to 50% in spring 2021.
“It has become abundantly clear that tariffs on distilled spirits products are causing rough seas on both sides of the Atlantic,” the council said.