US to impose tariffs on US$11.2bn of EU goods

Posted on 10 April 2019

Source: Taipei Times

The US wants to put tariffs on US$11.2 billion of EU goods — from planes to Gouda cheese to olives — to offset what it says are unfair European subsidies for plane maker Airbus SE.

While the size of the tariffs is small compared with the hundreds of billions the US and China are taxing in their trade dispute, it suggests a breakdown in talks with the EU over trade at a time when the economy is already slowing sharply.

The US and EU have been negotiating since last year about how to avoid tariffs that US President Donald Trump has wanted to impose to reduce trade deficits with nations such as Germany.

The US Trade Representative’s office late on Monday released a list of EU products it would tax in anticipation of a ruling by the WTO this summer.

The US in 2004 lodged a complaint with the WTO, which sets the rules for trade and settles disputes, that the EU was providing unfair support to Airbus.

The WTO ruled in May last year that the EU had provided some illegal subsidies to Airbus, hurting US plane manufacturer Boeing Co.

The US expects the WTO to say this summer that it can take countermeasures to offset the EU subsidies.

It is to start a consultation with industry representatives on the list of EU goods it wants to tax so that it can have a list ready.

“This case has been in litigation for 14 years and the time has come for action,” US Trade Representative Robert Lighthizer said.

The move, while nominally following international trade rules, appears to also reflect US frustration at the slow pace of talks on trade with the EU.

Trump in June last year imposed tariffs of 25 percent on steel and 10 percent on aluminum imported from the EU.

The EU responded with tariffs on about 2.8 billion euros (US$3.4 billion) of US steel, agricultural and other products, from Harley Davidson bikes to orange juice.

The US and EU have since July last year been in talks to scale back the tariffs, with Trump holding out the bigger threat of slapping tariffs on European automobiles — a huge industry in the region — should the negotiations not yield a result.

US officials have repeatedly expressed frustration at the slow pace of the talks.

The US announcement also comes just as Boeing is facing broad challenges over the global grounding of its 737 Max commercial jet amid concerns that technical problems could have contributed to two crashes in five months.

In a separate case, the WTO has also ruled that Boeing got a small amount of illegal support from the state of Washington worth about US$100 million a year.

Tariffs on European planes could in theory help Boeing and hurt Airbus, whose shares yesterday were down 1.5 percent on a day when stock markets were trading higher.

The US announcement also comes as Chinese Premier Li Keqiang (李克強) meets top EU officials to discuss thorny issues, including trade. 

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