The Trump administration plans to enact new 10%-25% tariffs on about $7.5 billion worth of European Union products starting on Oct. 18. The move follows a ruling Wednesday by the World Trade Organization that the EU had been subsidizing Airbus, giving the U.S. a significant victory in a 15-year legal fight over aviation subsidies.
“[T]he WTO has confirmed that the United States is entitled to impose countermeasures in response to the EU’s illegal subsidies,” U.S. Trade Representative Robert Lighthizer said. “Accordingly, the United States will begin applying WTO-approved tariffs on certain EU goods beginning October 18. We expect to enter into negotiations with the European Union aimed at resolving this issue in a way that will benefit American workers.”
The USTR has requested an Oct. 14 meeting with the WTO to gain formal authorization to enact the tariffs. The administration will place 10% tariffs on EU aircraft and aircraft industry products and 25% tariffs on various farm goods and industrial products, including cheese, olive oil, fruit juice, jelly, seafood, wine, whiskey and textiles.
While Wednesday’s ruling allowed tariffs on $7.5 billion worth of goods, the White House had initially requested $11 billion. President Trump nevertheless declared the ruling a vindication for the U.S..
“That was a big win with the WTO,” he told reporters Wednesday. “All of those countries were ripping off the U.S. That was a $7 billion win.”
EU officials have long disputed that their policies amount to a subsidy program. European Trade Commissioner Cecilia Malmström warned the U.S. against enacting new tariffs. “We remain of the view that even if the United States obtains authorisation from the WTO Dispute Settlement Body, opting for applying countermeasures now would be short-sighted and counterproductive,” she said in a statement provided by the European Commission.
The USTR said that the “bulk” of the tariffs would be placed on imports from France, Germany, Spain, and the United Kingdom because they were the four countries mainly responsible for the Airbus subsidies.
White House officials noted the WTO ruling allowed tariffs as high as 100%. They said the administration decided on lower rates in response to public comments about its tariff proposals. The officials added that the tariffs would be dropped if the Airbus subsidies were eliminated.
“We stand ready and willing to negotiate. We are hopeful that the addition of the tariffs will lead to that negotiation,” a USTR official said.
The U.S. and EU have been fighting since 2004 over whether their respective aerospace industry policies toward Airbus and Boeing amount to unfair practices. The WTO’s ruling said the EU subsidized Airbus by giving it preferential treatment on interest rates.
“The Appellate Body upheld the Panel’s findings that Airbus paid a lower interest rate … than would have been available to it on the market and, consequently, a benefit was thereby conferred,” the WTO ruled.
EU officials have countered that the U.S. unfairly subsidizes Boeing. The alleged subsidy was a $100 million tax break given to Boeing from Washington state, not a federal government policy.
