World Trade Organization Approves Airbus US Import Tariffs

The World Trade Organization (WTO) has today formally agreed to impose $7.5 billion in tariffs on European made goods entering the United States. The argument was brought before the WTO in retaliation for what they claimed were illegal state subsidies to European planemaker Airbus.

Airbus orders
The WTO has approved new tariffs. Photo: Airbus

Today at the World Trade Organization’s Geneva, Switzerland, headquarters members formally approved the arbitration brought forward by the United States, making it the largest award in the organization’s history.

This latest development marks the final bureaucratic hurdle in a long drawn out battle paving the way for the United States to legally impose tariffs on European goods starting October 18th.

President Trump called it a “big win”

When the WTO first ruled in favor of the United States earlier this month, President Donald Trump hailed the decision, calling it a “big win” for the United States while also claiming credit for the final outcome of a case that has lasted for 15 years.

According to France 24, the 73-year-old president said: “We’re having a lot of wins at the WTO.” “All of those countries were ripping off the United States for many years and they know I’m wise to it.”

Tariffs on $7.5bn of goods will be imposed. Photo: Airbus

Knowing that it would be a bad outcome for both sides the European Union made a last-ditch effort in seeking a satisfactory outcome over the weekend to avoid what will now be a tit-for-tat trade war.

European Trade Commissioner Cecilia Malmstrom told her U.S. counterpart, Robert Lighthizer that should the United States go ahead with its plan to impose tariffs on European goods, the EU would be compelled to apply countermeasures that would include Boeing.

“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.”

While at the Monday morning meeting in Geneva, Bloomberg News quotes U.S. Ambassador to the WTO Dennis Shea as saying the Trump administration’s preference is to “find a negotiated outcome with the EU that ends all WTO-inconsistent subsidies.”

The EU claims that they reached out to the United States

Meanwhile the EU claims they reached out to Washington last month, but their proposals fell on deaf ears.

The European Union is now calling the American tariffs “short-sighted” and is urging the United States to find a “fair and balanced solution” to the dispute, according to the EU deputy head of delegation to the WTO Paolo Garzotti.

Boeing factory in Washington
The EU is calling the American tariffs “short-sighted “Photo: Boeing

“Both the EU and the US have been found at fault by the WTO dispute settlement system,” Garzotti said. “In the parallel Boeing case, the EU will in some months equally be granted right to impose additional countermeasures. The mutual imposition of countermeasures, however, would only harm global trade and the broader aviation industry.”

Tariffs to start on Friday

In the American plan due to be imposed on Friday, the office of the U.S. Trade Representative said it would impose a 10% tariff on large civilian aircraft that are manufactured in France, Germany, Spain, and the U.K. in other words, Airbus aircraft.

Boeing737 MAX
The EU will impose its own tariffs on Boeing. Photo: Boeing

Food and drink items such as whiskeys, wine, beer, cheese, olives, butter and certain pork products like Spain’s prized Iberico ham will see a tariff of 25% imposed on their importation into the United States.

Now, unfortunately, The European Union will react in kind with its own sanctions on motorcycles, bourbon, and orange juice and of course Boeing aircraft.