US punishes EU with duties on cheese, airplanes and whiskey
On Wednesday, the United States said it would impose 10 percent tariffs on European-made Airbus aircraft and 25 percent tariffs on French wine, Scotch and Irish whiskey, and cheese from across the continent as punishment for EU illegal aircraft subsidies..
The announcement comes after the World Trade Organization gave Washington the green light to impose $ 7.5 billion a year in tariffs on EU goods, which in the long run represents a move that threatens to reignite a transatlantic trade war..
These measures follow the imposition of hundreds of billions of dollars in trade duties that the United States and China have levied on each other during the ongoing trade war..
The US Trade Representative’s target list for EU tariffs, due to take effect October 18, includes large Airbus jets made in France, the UK, Germany and Spain – the four countries of the Airbus consortium. But no tariffs will be imposed on European-made aircraft parts used in Airbus assembly operations in Alabama, or those used by rival US aircraft manufacturer Boeing Co, which will save US jobs..
«Finally, after 15 years of litigation, the WTO confirmed that the United States has the right to impose countermeasures in response to illegal EU subsidies.», – U.S. Trade Representative Robert Lighthizer said in a statement.
«We intend to enter into negotiations with the European Union aimed at resolving this issue in a way that is beneficial to American workers.», – added Lighthizer.
Tariffs are heavily targeted at the four countries of the Airbus consortium, as well as Spanish olives, British sweaters and woolen fabrics, as well as German tools and coffee, British whiskey and French wine. Cheese from almost every EU country will be subject to 25% duties, but Italian wine and olive oil will be exempt from them, along with European chocolate.
The size and scope of the duties were significantly reduced from the $ 25 billion list released by Washington earlier this year, which included helicopters, major aviation components, seafood, luxury goods and other product categories that were dropped from announced Wednesday..
A source told Reuters that the USTR deliberately did not use the full WTO-approved response to push the EU to the negotiating table..
U.S. Tariffs to Target EU Planes, Whiskey on Oct. 18
«The US has the right to raise rates or change affected products at any time. USTR will continually re-evaluate these rates based on our agreements with the EU», – told USTR.
USTR was pushing for WTO ratification of its tariff list by October 14. These tariffs may take effect just three days after the planned October 15 increase in tariffs on Chinese goods by $ 250 billion, up to 30% from 25%..
As Washington and Beijing try to ease their bitter 15-month trade war, the US-EU trade division looks set to worsen..
Airbus spokesman Clay McConnell said the French aircraft manufacturer is assessing the list and its possible implications in «close cooperation with the European Commission».
The WTO, he said, in the coming months will give the EU powers to impose tariffs on US goods based on its findings of illegal subsidies of Boeing by the state of Washington, which may equal or exceed US tariffs..
«Airbus believes the only way to prevent the negative impact these countermeasures could create is for the US and EU to find a solution to this long-standing dispute through a negotiated settlement before tariffs take effect.», – he said.
In their ruling, WTO arbitrators said Boeing lost the equivalent of $ 7.5 billion a year from sales and disruptions to deliveries of some of its largest aircraft due to cheap European government loans to Airbus..
WTO verdict allows Washington to target the same value of goods from the EU, but excludes any retaliation against European financial services.
The measures taken could place a serious financial burden on European airline customers in the United States. Delta Air Lines said it has about 170 Airbus aircraft on order that will be affected.
«The aircraft are significant purchases that require long lead times – often years in advance, Delta said in a statement. – Introducing fares on planes that American companies have already booked will cause serious damage to US airlines, the millions of Americans they use, and the traveling public».
Share sales accelerated amid fears of a slowdown in global growth that weighed the European market on Wednesday, as the decision renewed fears of damage to an already ailing European economy. The pan-European STOXX 600 Index dropped 2.7%, the worst since December 2018. Airbus shares closed down 2%.
France and the European Union ready to respond «sanctions», if the United States rejects Europe’s hand in a trade dispute over Airbus, French Finance Minister Bruno Le Maire said Thursday.
«If the American administration rejects the hand extended by France and the European Union, we prepare to respond with sanctions», – said Le Maire.
China and US agree to phase out trade duties