Trump Administration Raises Duties on EU Aircraft to 15%

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

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

The U.S. 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% and will make minor changes to the previously released product list.

The U.S. 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% duties on Airbus aircraft and 25% tariffs on a range of European consumer exports, like cheeses and Spanish olives.

The U.S. 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 U.S. and mean higher prices for those models for U.S. airlines that have orders on the books.

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

Read more: U.S. to Put Tariffs on Europe Planes, Whiskey After WTO Ruling

The European Commission, the EU’s executive arm, said that is what it was aiming for as well.

“In our view the focus now should be on finding a negotiated solution to the aircraft disputes on the basis of the concrete EU proposals for existing subsidies and future disciplines in this sector,” spokesman Daniel Rosario said in an emailed statement.

Fifteen years ago, the U.S. 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 U.S. and EU were guilty.

The dispute came to a head last fall when the WTO said the U.S. could legally impose tariffs on $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 $4.04 billion set in 2002.

At the time the U.S. 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.

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

The U.S. 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%; 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 U.S. rum, vodka, and brandy in its parallel case at the WTO concerning Boeing.”

--With assistance from Kim Chipman and Aoife White.

To contact the reporters on this story: Bryce Baschuk in Geneva at bbaschuk2@bloomberg.net;Jenny Leonard in Washington at jleonard67@bloomberg.net;Shawn Donnan in Washington at sdonnan@bloomberg.net

To contact the editors responsible for this story: Brendan Murray at brmurray@bloomberg.net, Ana Monteiro, Margaret Collins

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