US mulls tariffs on $11 billion of EU goods over Airbus aid

Bloomberg/ SeongJoon Cho

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The threatened tariffs follow World Trade Organisation’s (WTO) ruling in May 2018 that Airbus had received illegal funding for its A380 and A350 models, costing Boeing sales.

Tuesday 09, April 2019

(Bloomberg) --President Donald Trump’s administration is proposing tariffs on some $11 billion in imports from the European Union in response to harm the US says is being caused by the bloc’s subsidies to Boeing rival Airbus.

The Trump administration said that the threatened tariffs will be implemented only after the WTO give the final go-ahead this summer, marking a rare show of faith in an institution that the President himself has attacked on a number of occasions.

In issuing the list, which includes goods ranging from jetliners and passenger helicopters to cheese, wine as well as ski-suits and motorcycles, the US Trade Representative’s (USTR) office cited the WTO’s finding that aid to Airbus has repeatedly caused adverse effects to the US.

In a statement, the USTR said that President Trump’s government will immediately begin a process under Section 301 of the Trade Act of 1974 to identify products of the EU to which additional duties may be applied until the EU removes those subsidies.

The US move is provocative on a number of fronts. Washington said it would impose the tariffs under the same previously dormant trade statute that it has used to justify duties on China over the past year.

The threat also comes just as the EU’s members are in the final stages of negotiating the terms of a mandate for the European Commission, its executive arm, to begin talks on industrial tariffs with the Trump administration. The new action may therefore further complicate those contacts.

The proposed measures are relatively minor compared with the US’s ongoing trade war with China, in which the two sides have imposed tariffs on about $360 billion of each other’s goods in the past nine months.

But they mark a significant escalation in tensions with the EU, which has implemented retaliatory duties on EUR 2.8 billion ($3.2 billion) of US imports following Trump’s trade restrictions on foreign steel and aluminium.

Some EU members, led by France, are already sceptical of the value of negotiations with the US, which were agreed to last July in a bid by the EU to avoid auto tariffs Trump has threatened.

TAGS : A350, A380, Airbus, Boeing , US tariffs, EU , USTR, President Donald Trump

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