U.S. Suspends Tariffs on U.K. Goods in Airbus-Boeing Dispute

(Bloomberg) -- The U.S. will suspend retaliatory tariffs on U.K. products caught up in the longstanding dispute over illegal aid to Boeing Co. and Airbus SE in a boost for post-Brexit Britain’s trade agenda.

The tariff suspension will last four months to “focus on negotiating a balanced settlement to the disputes,” the U.K. government said in a statement on Thursday. The decision means goods like Scotch whisky, biscuits and clotted cream can be imported to the U.S. from Britain without being subject to an additional 25% duty.

Removing tariffs on U.K-U.S. commerce has been a priority for Prime Minister Boris Johnson’s government as they seek a broader trade deal with President Joe Biden’s administration. Britain dropped tariffs on some U.S. products indefinitely in January in a bid to reduce trade tensions. The former Trump administration did not reciprocate the U.K.’s concession.

“It shows what the U.K. can do as an independent trading nation,” Johnson said in a statement. “I now look forward to strengthening the U.K.-U.S. relationship.”

The U.S.’s temporary rollback could help resolve part of the World Trade Organization dispute over the aid to Boeing and Airbus, which has resulted in WTO-authorized tariffs targeting nearly $12 billion worth of transatlantic trade.

The dispute, which has dragged on for 17 years, involves the U.S. and four European countries that manufacture Airbus aircraft and parts -- Germany, France, Spain and the U.K.

U.S. Trade Representative spokesman Adam Hodge said the tariff suspension agreement only applied to U.K. goods and EU goods will remain subject to retaliatory tariffs.

‘Bold’ Move

In November, the EU announced tariffs targeting $4 billion worth of Boeing planes and U.S. products including spirits, nuts and tractors as part of a tit-for-tat escalation against the U.S. For its part, the U.S. imposed levies on $7.5 billion of EU products starting in 2019.

In 2018, prior to the introduction of the tariffs, the U.S. imported about 550 million pounds ($767 million) of goods affected by the measures from the U.K., Britain’s Department for International Trade said.

Though the European Commission had repeatedly asked the U.S. for a six-month suspension of tariffs in order to negotiate a settlement, former U.S. Trade Representative Robert Lighthizer declined to do so and further increased tariffs against EU goods in one of his final acts in office.

The U.K. said the latest move was a “bold, joint step” toward resolving one of the longest running issues at the WTO. The statement also said that the U.K. and U.S. would focus on “addressing the challenges posed by new entrants to the civil aviation market from non-market economies, such as China”.

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