The United States government shared yesterday that it is raising tariffs on certain European Union products. Along with specific alcoholic beverages, aircraft components from France and Germany will fall under these higher tariffs.
Trading back and forth
In October 2019, the US was given the go-ahead to impose additional duties on approximately $7.5 billion in EU products as a result of the World Trade Organization Large Civil Aircraft litigation. In a press release seen by Simple Flying, the US Trade Representative expressed that the nation implemented its authorized countermeasures in a reasonable manner and used trade data from the previous year to determine the number of products to fall under these measures. However, it feels the EU unfairly calculated tariffs on its part.
“In September, 2020 the EU was authorized to impose tariffs affecting $4 billion in U.S. trade as a result of related WTO litigation. In implementing its tariffs, however, the EU used trade data from a period in which trade volumes had been drastically reduced due to the horrific effects on the global economy from the COVID-19 virus,” the press release reads.
“The result of this choice was that Europe imposed tariffs on substantially more products than would have been covered if it had utilized a normal period. Although the United States explained to the EU the distortive effect of its selected time period, the EU refused to change its approach.”
Troubles across the pond
Subsequently, the USTR said that in an effort to keep the two actions proportionate to each other, the US is forced to change its reference period to the same period used by the EU. However, it shares that in order to not escalate the situation, the country is adjusting the product coverage by less than the full amount that would be justified utilizing the EU’s chosen timeframe.
Altogether, the US wants the EU to take action to compensate for these tariffs amid the ongoing trade dispute. The conflict over aircraft subsidies has been brewing for several years. However, there was an escalation recently. Namely, concerns over factors such as digital taxes in the EU and metals tariffs in the US increased tensions. Notably, the EU is placing a 15% tariff on aircraft and parts made in the US.
According to Bloomberg, Airbus, which has been ramping up its presence in the US, expressed its frustration at the USTR decision. The manufacturer said that the move is counterproductive in every way and it would hurt US manufacturing, employees, and customers. Ultimately, the company said the measures won’t contribute to a trusting climate to create a negotiated solution. Therefore, it wants the EU to respond appropriately.
It is not confirmed exactly when these additional tariffs will be implemented. However, there may be further twists in the tale as the US gears up for a new administration next month.
Simple Flying reached out to Airbus for comment on these tariffs. We will update the article with any further announcements from the company.
What are your thoughts about these tariffs being imposed on the EU by the US? How will aviation be impacted as a result? Let us know what you think of the situation in the comment section.