US imposes new tariffs on French, German products in Airbus-Boeing spat

File photo. A customer shops for French wine in a shop in Los Angeles, California, USA, 4 October 2019. [Etienne Laurent/EPA/EFE]

The United States announced Wednesday (30 December)  that it will impose additional tariffs on French and German products as part of a long-running dispute over subsidies for aircraft manufacturers Airbus and Boeing.

The tariffs are on “aircraft manufacturing parts from France and Germany, certain non-sparkling wine from France and Germany, and certain cognac and other grape brandies from France and Germany,” which will be added to the list of products taxed since 2019, according to a statement from the US Trade Representative.

It said the move was in retaliation to tariffs imposed by the European Union which it considers unfair.

WTO members greenlight EU sanctions against US over Boeing aid

World Trade Organisation members gave the green light Monday (26 October) for Brussels to slap tariffs on $4.0 billion in US imports annually in retaliation for illegal American aid to plane maker Boeing.

The decision is the latest twist in the 16-year trade battle over aircraft subsidies that turned increasingly sour under the protectionist instincts of US President Donald Trump, and comes despite hopes for a trade truce following Joe Biden’s election.

The EU was authorized this year by the World Trade Organization (WTO) to levy additional customs duties on American products.

But Washington believes it has been penalized by the method of calculation chosen, which, according to the Trump administration, has led to an excessive amount of customs duties levied on American products.

“In implementing its tariffs… the EU used trade data from a period in which trade volumes had been drastically reduced due to the horrific effects on the global economy from the Covid-19 virus,” the USTR statement said.

“The result of this choice was that Europe imposed tariffs on substantially more products than would have been covered if it had utilized a normal period. Although the United States explained to the EU the distortive effect of its selected time period, the EU refused to change its approach,” the statement said.

As a result the US “is forced to change its reference period to the same period used by the European Union,” it continued.

The US also deplored an EU decision to exclude the UK from its calculations, which it argued unfairly increased the tariffs.

The feud over European aircraft manufacturer Airbus and its American competitor Boeing is the longest and most complicated ever handled by the WTO.

The aviation feud predates Trump, but Washington quickly embraced the opportunity to impose $7.5 billion in tariffs against Europeans after also being cleared to do so by the WTO last year.

Washington imposed punitive tariffs of 25% on iconic EU products such as wine, cheese and olive oil and put a 15% tariff on Airbus planes in March.

Amid COVID-19 recession concerns, US aircraft tariffs come into effect

The Trump administration enacted its planned duty rate increase for aircraft imported from the EU on Wednesday (18 March), amid the continuing spread of COVID-19 and fears of a subsequent recession. These measures will increase the rate from 10 to 15%, particularly impacting Airbus.

In retaliation, the EU has been imposing customs duties on $4 billion of American exports since the beginning of November.

Emily Haber, Germany’s ambassador to the United States, this month urged quick action to resolve the dispute, calling it a distraction from bigger issues that require joint action such as climate change and the pandemic.

Airbus and Boeing sold just one plane in June

The global aerospace duopoly of Airbus and Boeing managed to sell just one aircraft in June, as the virus outbreak’s economic impact on the aviation industry and the grounded MAX scandal continues to affect order books.

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