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U.S. Revises Tariffs on EU Goods in Airbus Dispute

Posted February 18, 2020


Ahead of the long holiday weekend, the Trump administration last Friday quietly revised its retaliatory duties on $7.5 billion worth of European goods in a long-running dispute over the European Union’s subsidies for Airbus.

The latest changes follow Washington’s decision last fall to impose 10% tariffs on European aircraft and 25% duties on a long list of other goods, including cheese, single-malt Scotch, Irish whiskey, liqueurs, wine, sweaters, coffee, pipe cutters, various tools, sweet biscuits, olives and pork.

Background
 

The retaliatory duties are meant to put pressure on the EU to fix trade practices that Washington argues are deeply problematic and put U.S. manufacturers, like rival planemaker Boeing, at a disadvantage.

The USTR in December asked for comments on raising the retaliatory duties to 100% and revising the overall list by taking some items off and putting new items on.

Boeing, which has been embroiled with rival Airbus in a World Trade Organization dispute over the issue of subsidies for more than fifteen years, urged the USTR to “narrowly” target the government’s retaliation in order to limit any negative impact on U.S. airlines and manufacturers.

Section 301 Enforcement Changes 
 

Ignoring Boeing’s recommendation and also choosing not to “carousel” its trade retaliation against European goods (as U.S. law provides), the USTR has instead taken the following actions:

  • Effective March 18, the additional tariff on large civil aircraft will increase from 10% to 15%.

Other Changes (Effective March 5):

  • Prune juice (HTSUS 2009.89.40) will no longer be subject to the 25% duty.
  • Butchers’ or kitchen shipping or mincing knives (HTSUS 8214.90.60) from France and Germany and telescopic sights for rifles not designed for use with infrared light (HTSUS 9013.10.10) from Germany will be subject to the 25% duty.

Mixed Reactions 
 

In spite of the bump in the aircraft tariffs, the European Commission welcomed the White House’s decision not to ratchet up duties on other goods, saying “In our view, the focus now should be on finding a negotiated solution to the aircraft disputes on the basis of the concrete EU proposals for existing subsidies and future disciplines in this sector.”

While the move came as a relief to those who were bracing for the possibility of broader tariff increases, the 25% additional duty will continue taking a toll on many businesses and households — including consumers at the grocery store, major U.S. airlines, department stores, liquor importers, specialty wine shops and some manufacturers.

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