EU hits US goods with tariffs in Airbus-Boeing dispute

Brussels will hit US products ranging from sugarcane molasses to spirits with punitive tariffs in the transatlantic row over aircraft subsidies, even as it looks forward to better relations after Joe Biden’s victory in last week’s American presidential election. 

Valdis Dombrovskis, the EU’s trade commissioner, said on Monday that Brussels would use retaliation rights awarded last month by the World Trade Organization to target US imports into Europe with additional duties. The measures will take effect on Tuesday. 

The WTO has authorised the EU to hit almost $4bn of US goods with additional tariffs in retaliation against illegal state aid for Boeing. The US has had extra duties in place against $7.5bn of European products since last year in a parallel complaint against aid for Airbus. The awards were the fruit of a 16-year transatlantic legal battle over subsidies to the sector. 

Brussels said that extra tariffs of 15 per cent would be placed on US aircraft, while additional duties of 25 per cent would be imposed on a wide range of other products including casino tables, fitness machines and sought-after seaweeds. 

As is standard with such lists, the EU has sought to target sensitive products that can lead to pressure on politicians to resolve the dispute: Georgia, a state that was tightly contested in the presidential election and that will now determine which party has a majority in the US senate, is an exporter of cane molasses. 

An EU diplomat cautioned that the list was finalised before it became clear that there would be senate run-off races and a recount in the Peach State. Other products on the list include tractors, groundnuts and orange juice. 

The EU decided to hold back from imposing the tariffs ahead of the US election, but said that it was now doing so out of frustration with the lack of progress with the Trump administration in finding a settlement to the long-running dispute. 

“We are ready to remove our tariffs if the US removes its tariffs,” Mr Dombrovskis told reporters after a virtual meeting of EU trade ministers that discussed transatlantic relations. He said that Brussels wanted a rapid de-escalation of the dispute, and an agreement with the US on state aid for aircraft manufacturing. 

“We have made clear at every stage that we want to settle this long-running issue,” he said. 

The EU endured months of frustration earlier this year as it awaited a delayed WTO decision on its retaliation rights against state aid for Boeing, while the US was already hitting European products ranging from French wine to Italian cheese with additional duties. 

Mr Dombrovskis said the EU was simply “mirroring” how the US had acted, and was “exercising its legal rights” but said he hoped that “we can quickly put this behind us”.

EU diplomats said that the bloc had decided to move ahead now given that the presidential election was over and because of a desire to avoid taking the step close to inauguration day. Brussels has sought for months to drive forward talks with the US to end the dispute, but the European Commission said on Monday that Washington “has not yet provided the basis for a negotiated settlement” by removing its own tariffs on EU goods. 

Brussels made the announcement on the same day that EU trade ministers expressed hopes for a brighter future in transatlantic trade relations after Mr Biden’s victory. Germany’s economy minister Peter Altmaier, who chaired Monday’s ministerial videoconference, said that the EU “will be trying to reach a new start” with the Biden administration. 

Mr Dombrovskis said that key areas of co-operation with the White House would include reforming the WTO and fighting climate change. He also called for the establishment of an EU-US trade and technology council.

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