US to levy tar­iffs on EU in Air­bus case

The Morning Call - - BUSINESS CYCLE -

from the World Trade Or­ga­ni­za­tion, which ruled that the United States could im­pose the tar­iffs as re­tal­i­a­tion for il­le­gal aid that the 28-coun­try EU gave to Air­bus in its com­pe­ti­tion with its Amer­i­can ri­val Boe­ing.

Cul­mi­nat­ing a 15-year fight over the EU’s sub­si­diz­ing of Air­bus, the ad­min­is­tra­tion’s Of­fice of the U.S. Trade Rep­re­sen­ta­tive said it plans to pub­lish a list of tar­geted prod­ucts later Wed­nes­day or on Thurs­day.

A se­nior ad­min­is­tra­tion of­fi­cial, who spoke on con­di­tion of anonymity, said that EU air­craft will face a 10% tar­iff and other prod­ucts a 25% import tax. The tar­iffs are in­tended to pres­sure the EU into drop­ping its sub­si­dies for Air­bus.

Pres­i­dent Don­ald Trump called the WTO rul­ing a “big win for the United States“and as­serted that it hap­pened be­cause WTO of­fi­cials “want to make sure I’m happy.”

“The WTO has been much bet­ter to us since I’ve been pres­i­dent be­cause they un­der­stand they can’t get away with what they’ve been get­ting away with for so many years, which is rip­ping off the United States,” Trump said at a joint White House news con­fer­ence with Pres­i­dent Sauli Ni­in­isto of Fin­land.

The move es­ca­lates un­cer­tainty for the U.S. and global economies at a time when Trump’s trade war with Bei­jing is weighing heav­ily on busi­nesses, par­tic­u­larly man­u­fac­tur­ers.

The U.S. had pre­pared for Wed­nes­day’s rul­ing and al­ready drawn up lists of the dozens of goods it would put tar­iffs on. They in­clude EU cheeses, olives, and whiskey, as well as planes, he­li­copters and air­craft parts in the case, though the de­ci­sion is likely to re­quire fine-tun­ing of that list if the Trump ad­min­is­tra­tion agrees to go for the tar­iffs.

The tar­iffs can take ef­fect no ear­lier than mid-Oc­to­ber be­cause a key WTO panel needs to for­mally sign off on them first. But they will likely have an im­pact on agri­cul­tural and other sec­tors of the Euro­pean econ­omy, at a time when other tar­iff bat­tles have dented global trade growth.

Stock mar­kets around the world, which were al­ready down on con­cerns for the world econ­omy, added to their losses on the news.

Wed­nes­day’s award fol­lows a WTO rul­ing in May 2018 that the EU had il­le­gally helped Air­bus with sub­si­dies.

How­ever, it does not end the long-run­ning trans-At­lantic dis­pute over air­craft: WTO ar­bi­tra­tors are ex­pected to rule next year about how much the EU can im­pose in tar­iffs fol­low­ing a sep­a­rate de­ci­sion that went against Boe­ing.

The EU’s top trade of­fi­cial said the bloc would pre­fer to reach a set­tle­ment with the United States to avoid a tar­iff war — but it will re­spond if Trump im­poses new du­ties on EU prod­ucts.

EU Trade Com­mis­sioner Ce­cilia Malm­strom said a tar­iff war “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.”

“If the U.S. de­cides to im­pose WTO au­tho­rized coun­ter­mea­sures, it will be push­ing the EU into a sit­u­a­tion where we will have no other op­tion than to do the same,” Malm­strom said.

Ital­ian For­eign Min­is­ter Luigi Di Maio, who was meet­ing with U.S. Sec­re­tary of State Mike Pom­peo in Rome on Wed­nes­day, vowed to “de­fend our busi­nesses.”

Ital­ian wine and cheeses could face an im­pact from U.S. tar­iffs.


The World Trade Or­ga­ni­za­tion rul­ing said the EU pro­vided il­le­gal sub­si­dies to Air­bus, a vic­tory for the U.S. and Boe­ing.

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