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Saturday, February 15, 2020, 17:00
Trump administration raises duties on EU aircraft to 15%
By Bloomberg
Saturday, February 15, 2020, 17:00 By Bloomberg

An Asiana Airlines Airbus A380 airplane sits at a gate at Los Angeles International Airport on May 24, 2018. (Daniel SLIM / AFP)

The US said Friday it will increase the tariff rate imposed on aircraft imported from the European Union to 15 percent from 10 percent on March 18.

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

READ MORE: In new attack, Trump threatens more tariffs against European Union

The US Trade Representative said in the statement Friday that it is leaving duties on certain other European goods such as Scotch and French wine at 25 percent 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

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 percent duties on Airbus aircraft and 25 percent tariffs on a range of European consumer exports, like cheeses and Spanish olives.

The US list continued to spare an Alabama Airbus plant that assembles single-aisle aircraft like the A320 by not hitting airplane parts. But the higher tariffs will hit wide body Airbus models not assembled in the US and mean higher prices for those models for US airlines that have orders on the books.

Both Boeing and Airbus have pushed US and EU officials to try and reach a negotiated settlement.

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 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 penalizing 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.

ALSO READ: China to EU, the US tariff game continues

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 percent; 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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