Daily Management Review

US Threatens EU With Tariffs Over Aircraft Maker Subsidy Issue


US Threatens EU With Tariffs Over Aircraft Maker Subsidy Issue
The United States has stepped up pressure on the European Union over the alleged subsidies that the block has been giving top to its aircraft making business. Just a couple of days after the US agreed to restart trade talks with China, Washington even threatened Brussels with tariffs on additional EU goods worth $4 billion if its demands were not met.
The US already had announced tariffs on EU products worth $21 billion in April and now a list containing products such as olives, Italian cheese and Scotch whiskey was released by the US Trade Representative’s (USTR) office.
While not giving much detail, the USTR said that 89 tariff sub-categories was being added to its earlier list and this new addition would include a range of variety of metals. The USTR said that the decision was taken after public comments on the issue.
The US and the EU have been fighting with each other at the World Trade Organization on the issue of subsidies given to US planemaker Boeing Co and its European rival, Airbus SE which has been ongoing for 15 years now and both the parties have threatened imposition of import tariffs on each others’ products worth billions of dollars in a tit-for-tat war which range from planes to tractors and food.
Last month, the US government was urged by senior officials from Boeing and a U.S. aerospace trade group to narrowly tailor any tariffs imposed on the EU over illegal aircraft subsidies so that American manufacturers are not hurt.
There were no comments from Boeing or Airbus.
US president Donald Trump’s latest tariff threats were criticized by the Distilled Spirits Council of the United States and warned that US consumers and jibs would be hurt by them. “We strongly oppose the inclusion of distilled products in the proposed retaliation list,” said spokeswoman Lisa Hawkins.
“U.S. companies - from farmers to suppliers to retailers - are already being negatively impacted by the imposition of retaliatory tariffs by key trading partners on certain U.S. distilled spirits ... and these additional tariffs will only inflict further harm,” she said.
During the recently held Paris Air Show, there were news articles that claimed that negotiations on an “enforceable mechanism” could be opened by the United States which could give the opportunity to Airbus to avail government funding on commercial terms which could smoothen the path to find a closure to the spat over aircraft subsidy.
Two cases involving the two largest aircraft makers of the world – Boeing and Airbus is the largest-ever corporate trade dispute that the WTO is hearing and it has found that billions of dollars of harmful subsidies had been given to both the companies. Experts expect the WTO to deliver a ruling on the US sanctions during the summer.
There is a possibility that imports tariffs could be immediately imposed on the goods mentioned in the initial list, the USTR said in the eventuality of the WTO arbitrator announcing a decision prior to the ending of the public comment on the supplemental list. It added that the tariffs on the initial list could be followed by further actions on the supplemental list.