WASHINGTON, DC – The World Trade Organization (WTO) ruled a month ago that the European Union (EU) could impose tariffs worth $4 billion on United States imports in retaliation for illegal American aid to plane maker Boeing, a year after the EU was sanctioned for its support of Airbus.
The decision was the latest development in a 16-year saga between Washington and Brussels over support for their leading civil aircraft manufacturers. The disagreement between the two countries boils down to the EU and the U.S. each claiming that the other’s airplane manufacturer is unfairly subsidized.
The European Union will put tariffs on $4 billion worth of U.S. goods, as a 16-year tit-for-tat trade war over illegal subsidies to American and European plane makers rumbles on. Brussels said a “lack of progress from the United States” to resolve the issue forced the bloc’s hand.
“We have made clear at every stage that we want to settle this long-running issue,” EU trade commissioner Valdis Dombrovskis told reporters. Adding that “in spite of our best efforts, due to a lack of progress from the U.S.” the tariffs would be imposed on Tuesday.
Brussels said the list of targeted products would “mirror” tariffs imposed by Washington and include aircraft, processed agricultural and industrial goods.
On Monday, the EU released the long anticipated list of U.S. goods targeted for tariffs. The list has two different tiers for tariffs: the first tier is limited to certain types of civilian aircraft at a rate of 15% and the second tier applies to a range of food, agricultural and industrial goods at a rate of 25%.
Last year, the World Trade Organization authorized the U.S. to impose punitive tariffs on $7.5 billion worth of EU exports in retaliation for illegal subsidies to Airbus. It was the largest arbitration award in WTO history. European cheese, single-malt whisky, olive oil, and French wine were caught in the crosshairs, hit with a 25 percent levy. A 10 percent tariff on Airbus planes was hiked to 15 percent in March.
In October, the WTO gave Europe similar powers over support offered to American plane maker Boeing.
Slapping tariffs on the U.S. is partly a negotiating tactic meant to push Washington back to the negotiating table but the Trump administration has dug in its heels.
