European aircraft included in US tariffs after WTO ruling
The US released a final list of billions of dollars of European products it will hit with new tariffs after the World Trade Organisation’s landmark ruling on illegal subsidies to Airbus.
The US plans to impose a 10 per cent tariff on large civil aircraft from France, Germany, Spain and the UK. It will also slap 25 per cent levies on a range of other items including alcohol, olives, cheese, butter and yoghurt from various European nations, said the US Trade Representative’s Office.
The US removed leather goods from its original proposed list, sparing luxury labels such as Givenchy and Louis Vuitton. Washington has requested the WTO meet on October 14 to formally authorise the tariffs. The duties would then take effect October 18, the officials said.
The WTO gave President Donald Trump the go-ahead to impose tariffs on as much as $7.5 billion (Dh27.55bn) worth of European exports annually in retaliation for illegal government aid to Airbus. The award is the largest in WTO history – nearly twice as large as the previous record of $4.04bn set in 2002. The goal of the Trump administration in imposing retaliatory duties is to persuade the European Union to reach a negotiated settlement, the US trade official said.
The ruling is a milestone in the WTO’s longest-running dispute that will further test transatlantic relations, which have deteriorated under Mr Trump’s “America First” approach to international ties. It is also an example of Mr Trump getting a favourable ruling from an organisation he has threatened to pull out of.
The US is already in a trade war with China, and any wider flare-up of tit-for-tat tariffs with Europe could threaten a fragile global economy. The WTO on Tuesday cut its trade growth forecast for this year to the weakest level in a decade, warning against a “destructive cycle of recrimination”.
The decision is one of the final hurdles before the US can announce which products from the European Union it will target with tariffs selected from an initial list. The Trump administration has been considering a trade weapon known as “carousel” retaliation, which would enable the US to regularly shift around the targeted goods, sources said last month. That would increase trade uncertainty and pain for European businesses.
A senior US official said that the Trump administration has the authority to periodically revise the retaliatory targets and tariff rates. The EU will retaliate against any Airbus-linked tariffs when the WTO rules early next year on the bloc’s dispute over US subsidies to Boeing, according to European Trade Commissioner Cecilia Malmstrom.
“The mutual imposition of counter-measures, however, would only inflict damage on businesses and citizens on both sides of the Atlantic, and harm global trade and the broader aviation industry at a sensitive time,” Ms Malmstrom said.
The bloc is ready to work with the US on a “fair and balanced solution for our respective aircraft industries”, she added Airbus warned that tariffs on its aircraft and components would come as a blow to the US aerospace industry, with about 40 per cent of its procurement coming from American suppliers.
The company also urged the Trump administration to take account of the forthcoming WTO decision on Boeing, saying those reciprocal tariffs could exceed the value of the US sanctions. Chief executive Guillaume Faury repeated calls for a negotiated settlement to the dispute.
The WTO has repeatedly ruled that Airbus unfairly benefited from launch aid loans and other trade-distorting subsidies for two Airbus models, the A380 and A350WXB.
“Europe is facing tariffs today because Airbus has refused for years to comply with WTO rulings,” Boeing said. “Unfortunately, Airbus’s non-compliance will negatively impact European member states, industries, and businesses completely unrelated to Airbus’s actions, as well as Airbus’s airline customers.”