American President Donald Trump’s plan to impose tariffs on $7.5 billion worth of European goods would put Airbus jobs at risk.
In the latest battle of a 15-year fight with Airbus over what the U.S. says are illegal subsidies given to the European planemaker, it is hard to see if anyone would actually win should tariffs be imposed.
Under the World Trade Organization (WTO) ruling the United States is set to impose a tariff on imported European goods that would see everything from Spanish olives to Scotch whiskey being targeted. Of course, like in any trade war, the European Union has vowed to retaliate in what can only be described as a tit-for-tat move.
Now we have heard all the rhetoric, what happens next?
The tariffs the United States is proposing are quite stiff and include a 25% duty on agricultural items and a 10% tariff on aircraft.
These are just the preliminary ideas with America, claiming it has the right to raise or lower the tariffs at its choosing.
Meanwhile, the European Union is waiting on a WTO ruling as to what it can impose against the United States as well as how it can retaliate over state aid given to Boeing.
How did this row between the U.S. and E.U. start?
The United States first filed a case with the WTO in 2004 claiming that the E.U. was giving cheap loans to Airbus that it considered to be illegal state subsidies.
The WTO decided that the U.S. was in the right, but nothing has changed prompting years of further squabbling.
Now U.S. trade officials are saying it is too late to make a deal and that tariffs will force the Europeans to alter the situation with Airbus.
The BBC is reporting U.S. Trade Representative Robert Lighthizer as saying:
“For years, Europe has been providing massive subsidies to Airbus that have seriously injured the US aerospace industry and our workers.
“Finally, after 15 years of litigation, the WTO has confirmed that the United States is entitled to impose countermeasures in response to the EU’s illegal subsidies.”
He added that the US is now expecting to “enter into negotiations with the European Union aimed at resolving this issue in a way that will benefit American workers.”
In response to Lighthizer’s words, French finance minister Bruno Le Maire said: France was “ready to respond firmly with our European partners”.
“A friendly resolution to the Boeing/Airbus dispute is the best solution, and all the more so given that Europe could impose sanctions on the US next year.”
The Airbus subsidies claim pre-dates Donald Trump’s presidency and is only a part of the 73-year-olds fight against cheap imports coming into the United States.
Regarding the Airbus issue just last week, Bloomberg reported Airbus chief executive Guillaume Faury warned that imposing taxes on aircraft would not only hurt Europe but America as well.
Unbeknownst to most people, nearly 40% of Airbus-related aircraft products come from American aerospace companies which Airbus claim supports 275,000 American jobs.
“Airbus is therefore hopeful that the US and the EU will agree to find a negotiated solution before creating serious damage to the aviation industry as well as to trade relations and the global economy,” Mr. Faury said.
Tariffs would harm both the E.U and U.S.A
Meanwhile, while the U.S. is talking tough, European Trade Commissioner Cecilia Malmstrom told her U.S. counterpart, Robert Lighthizer that the E.U. would feel compelled to file a parallel lawsuit over aid being given to Boeing making any kind of settlement harder to reach.
“I strongly believe that imposing additional tariffs in the two aircraft cases is not a solution,” Malmstrom said in an Oct. 11 letter to Lighthizer seen by Bloomberg News. “It would only inflict damage on businesses and put at risk jobs on both sides of the Atlantic, harm global trade and the broader aviation industry at a sensitive time.”
Hopefully, the United States and the European Union will come to their senses and realize that tariffs will hurt both parties and put thousands of jobs at risk, a situation neither party wants.