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EU to impose tariffs on $4bn US goods amid dispute over aircraft subsidies

Suban Abdulla
·3-min read
The USA flag and the European Union flag
In 2004, the US launched a legal challenge claiming that $22bn in illegal funding had been given to Airbus. Europe launched a counter-case claiming £23bn in illegal funding had been handed to Boeing. Photo: Jane Barlow/PA via Getty

The European Union is set to impose levies on up to $4bn (£3bn) of US imports from next week as the two sides’ dispute over aircraft subsidies heats up.

Tariffs will hit a long list of US goods such as planes and parts, some spirits, fruits, nuts and other farm produce, orange juice as well as other goods from construction equipment to casino tables, diplomats said.

It comes after a 16-year international trade saga over subsidies for US planemaker Boeing (BA) and EU rival Airbus (AIR.PA).

In October, the World Trade Organization (WTO) gave the EU the green light to hit US goods with punitive tariffs in retaliation for illegal state aid to Boeing. Last year, it handed the US a larger award, up to $7.5bn in a parallel case over subsidies for Airbus.

The US has not yet used the whole quota and could still raise duties on various EU goods or expand the hit list.

Together, the two cases represent the world’s largest ever corporate trade dispute.

It is understood that Brussels held off in the run up to the US election, but the bloc is now gearing up to announce the higher tariffs after getting backing from national EU governments.

The move to press ahead with the tariffs ensures an eleventh hour showdown with US president Donald Trump, who will stay in office till 20 January whether or not he wins the election.

This gives the Republican incumbent plenty of time to increase US tariffs on EU goods that were already imposed on products ranging from French wine to Italian cheese.

Currently, Democratic candidate Joe Biden is edging nearer to victory in the US election.

READ MORE: Boeing 737 MAX ready for takeoff as EU safety watchdog clears it to fly

Last month, US trade representative, Robert Lighthizer warned that any EU tariffs would “force a U.S. response” while Trump threatened to “strike back harder.”

President and CEO of the Distilled Spirits Council of the United States, Chris Swonger, “urged the EU to stand down on imposing tariffs” until the elections are resolved.

Warning of “immediate retaliation” by the US, he said that it is the “worst time to escalate” this trade war.

“Additional tariffs will be a major blow to the US spirits industry, especially craft distillers who are struggling to regain their footing following the closings of distillery tasting rooms, restaurants and bars due to COVID-19, as well as the EU tariffs that were slapped on American Whiskey in 2018,” Swonger added.

The European Commission told the Financial Times: “The EU is currently finalising its process to use its retaliation rights in case we do not reach a mutually agreed solution with the US, including the immediate suspension of the US countermeasures currently in place.”

The new tariffs place Britain, which is officially leaving the EU at the end of the year, in a precarious position, particularly as it has yet to agree a trade deal with both the EU and the US.

As a partner of France-based Airbus, the UK is left with a choice to decide whether to join EU countries in imposing the levies, but Britain has pledged to “keep all options open.”

In 2004, the US launched a legal challenge claiming that $22bn in illegal funding had been given to Airbus. Europe launched a counter-case claiming £23bn in illegal funding had been handed to Boeing.

Watch: Jet spat: EU wins right to hit U.S. with tariffs