EU set to hit US products with tariffs in dispute over aircraft

The EU is set to hit US products from casino tables to groundnuts with additional tariffs in the two sides’ dispute over aircraft subsidies next week, after holding off on retaliation in the run-up to the US presidential election.

EU diplomats told the Financial Times that Brussels was gearing up to announce the higher tariffs after securing approval for the list of targeted products from national governments. 

The World Trade Organization last month confirmed the EU’s right to hit almost $4bn of US goods with punitive tariffs in retaliation for illegal state aid to Boeing. The WTO handed a larger award to the US last year in its parallel complaint against aid for Airbus, and as a result the US has already levied additional tariffs on European products ranging from French wine to Italian cheese. 

Diplomats told the FT that the EU would impose its tariffs next week, having opted not to rush through measures ahead of the US election out of concern it would lead to accusations of meddling in the country’s domestic politics. 

The move is set to be announced after a strategic discussion among the bloc’s trade ministers on EU-US relations that will take place on Monday. 

One EU diplomat said he expected decisions on the matter would be announced “in light of” ministers’ discussions. “I do expect there will be something you will have on the 9th or the 10th [of November],” the diplomat said. 

Valdis Dombrovskis, the EU’s trade commissioner, told the FT last month that Brussels would introduce the tariffs if US authorities did not swiftly withdraw the ones they had slapped on EU products because of the subsidies dispute. Washington has given no such indication.

In response to a request for comment, the European Commission said: “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 EU’s retaliation list covers a wide range of US products, including aircraft, tractors and diggers, gym equipment, casino tables and groundnuts, as well as grapefruit juice and orange juice.

The dispute over aircraft subsidies dates back to 2004, when the US launched a case claiming that $22bn in illegal funding had been given to Airbus. The EU launched a counter-challenge, claiming $23bn in illegal aid had been offered to Boeing.

The retaliation rights of $3.99bn are far less than those awarded to the US last year in its parallel case against Airbus, but Brussels hopes that they will help galvanise talks on a settlement to the disagreement. 

Mr Dombrovskis and other EU senior policymakers have repeatedly emphasised their desire for talks to reach an agreement on aircraft subsidies and bring the spat to an end. 

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