Tariffs of 25% Will Be Imposed on Billions' Worth of European Imports on Oct. 18; USTR Releases List
Although the U.S. is authorized to levy "prohibitive" tariffs -- up to 100 percent -- on $7.5 billion in European imports, senior U.S. trade officials say they have decided to impose 10 percent tariffs on large civil aircraft and 25 percent tariffs on some European food products, British apparel, blankets and bed linen, some Irish and Scotch whiskey, German or British hand tools, lenses, books and self-propelled heavy equipment. The tariffs will go into effect Oct. 18, the officials said, and a Federal Register notice with the details is expected Oct. 3. The USTR's full list includes more than 150 tariff lines, though some are only part of the eight-digit line.
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The World Trade Organization authorized the tariffs because the European Union's subsidies of Airbus launches harmed the U.S. by $7.5 billion annually. The EU has said it is seeking a negotiated solution to both this 15-year case, and the case that alleged Boeing was illegally subsidized by Washington state, and that those subsidies cost Airbus sales (see 1903280040).
EU Trade Commissioner Cecilia Malmström issued a statement Oct. 2, after the retaliation level was made public, that said: "The European Commission has consistently communicated to the United States that the European Union is ready to work with them on a fair and balanced solution for our respective aircraft industries." She said: "The EU has, as recently as this July, shared concrete proposals with the U.S. for a new regime on aircraft subsidies, and a way forward on existing compliance obligations on both sides. So far the U.S. has not reacted."
She said the EU's "readiness to find a fair settlement remains unchanged. But 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 do the same.” She said because the WTO will authorize retaliation over the Boeing subsidy within a few months, it would be "short-sighted and counterproductive" for the U.S. to impose tariffs now.
A senior USTR official told reporters on a conference call Oct. 2 that they "do not believe that what they have put forth is sufficient to stop the subsidies. We stand ready and willing to negotiate. We are hopeful that the imposition of the tariffs will lead to that negotiation."
Airbus CEO Guillaume Faury issued a statement that said that tariffs would hurt U.S. airlines, suppliers and air travelers. "Airbus is therefore hopeful that the US and the EU will agree to find a negotiated solution before creating serious damage to the aviation industry as well as to trade relations and the global economy.” The company noted that nearly 40 percent of its procurement comes from US aerospace suppliers. Airbus said the American supply chain supports 275,000 American jobs.
Boeing did not respond to an International Trade Today request for comment, but told The Wall Street Journal: “Airbus could still completely avoid these tariffs by coming into full compliance with its obligations. We hope it will finally do that.”
A reporter on the conference call asked the USTR senior official why, given that large civil aircraft is at the heart of the dispute, tariffs on aircraft are lower than tariffs on unrelated imports. Is it because the U.S. is concerned about jeopardizing Airbus jobs in Alabama? The official did not directly respond to that question, but said all the products and levels chosen were done so taking public comments into consideration (see 1905150013). Boeing had asked that Airbus products be hit with 100 percent tariffs.
In response to a question from International Trade Today, the official said they hope the 25 percent and 10 percent levies will be sufficient to convince the EU to negotiate a settlement, but added, "We do have the authority to reassess, after a period of time, the products and the tariff rate."
Only the United Kingdom, France, Germany and Spain are in the Airbus consortium, but cheese imports from Italy, for instance, are on the list, including Pecorino, Parmesan and Provolone. Yogurt from any of the EU countries -- including Greece -- is also on the list, as is Irish butter. The official said that all of the EU is responsible for the lengthy battle over subsidies, and that USTR hopes that Italy will be more successful in convincing the EU to change course than the U.S. has been.
In a press conference with Finland's president, President Donald Trump interrupted when that leader was asked a question about the tariffs planned over the Airbus case. “Excuse me, the wins are now, because I do not like the WTO, and they want to make sure I am happy, because all of those countries were ripping us off. This is a $7 billion win. Not bad.”