Trump administration raises duties on European aircraft to 15%

WASHINGTON (BLOOMBERG) – The US said Friday (Feb 14) it will increase the tariff rate imposed on aircraft imported from the European Union (EU) to 15 per cent from 10 per cent on March 18.

The move is part of a long-running spat in which the US has sought to penalise the EU for offering illegal subsidies to Airbus SE that harmed American aircraft maker Boeing Co.

The US Trade Representative (USTR) said in the statement Friday that it is leaving duties on certain other European goods such as Scotch and French wine at 25 per cent and will make minor changes to the previously released product list.

The US is deploying a trade tactic known as carousel retaliation, whereby governments periodically shift duties and tariff rates on different groups of goods in order to increase pain and uncertainty for exporters.

On Oct 18, Washington imposed the original 10 per cent duties on Airbus aircraft and 25 per cent tariffs on a range of European consumer exports, like cheeses and Spanish olives.

Fifteen years ago the US filed a dispute against the EU’s subsidies for Airbus, and the EU filed a counter-suit shortly thereafter. The WTO has subsequently ruled that both the US and EU were guilty.

The dispute came to a head last fall when the WTO said the US could legally impose tariffs on US$7.5 billion (S$10.44 billion) of European exports in retaliation for illegal government aid to Airbus.

The award was the largest in WTO history – almost twice as large as the previous record of US$4.04 billion set in 2002.

At the time the US held off on penalising certain luxury goods like cognac and handbags, with administration officials saying their goal in imposing the duties was to persuade the EU to negotiate a settlement.

But a transatlantic trade peace has proved elusive and US officials say the EU’s overtures have been unacceptable.

The US Trade Representative subsequently launched a review of its tariffs and sought input on whether it should remove some products from the October list of tariffs; increase duties on certain goods on that list up to 100 per cent; or impose levies on additional products not included in the October list.

“The longer these disputes are unresolved, the greater the threat of even more tariffs on our industry,” the Distilled Spirits Council of the United States said in a statement Friday. “The EU has stated it may impose retaliatory tariffs this spring on US rum, vodka, and brandy in its parallel case at the WTO concerning Boeing.”

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