US threatens $11bn tariffs on EU goods including wine and cheese

The United States Trade Representative (USTR) has proposed tariffs on US$11 billion worth of imports from the EU in response to its subsidies that support Airbus over rival aviation company Boeing.

The USTR has released a list of products – including wine, cheese, aircraft, motorbikes and olive oil – which will be affected by the proposed tariffs. It cites evidence put forward by the World Trade Organisation (WTO) which found that EU subsidies to Airbus have caused “adverse effects to the United States”. The USTR estimates that these adverse effects amount to as much as $11 billion in trade each year. Ruling back in May last year, the WTO stated that Airbus had received illegal funding for its A380 and A350 models, adversely affecting Boeing’s sales.

US trade representative, Robert Lighthizer, said: “This case has been in litigation for 14 years, and the time has come for action. The Administration is preparing to respond immediately when the WTO issues its finding on the value of U.S. countermeasures.

“Our ultimate goal is to reach an agreement with the EU to end all WTO-inconsistent subsidies to large civil aircraft. When the EU ends these harmful subsidies, the additional U.S. duties imposed in response can be lifted.”

Currently, the product list is preliminary and the USTR has stated that it will release a final product list once the WTO has released a report on the value of the US countermeasures.

In a statement, Boeing said it “supports the U.S. trade representative and his team in their ongoing efforts to level the playing field in the global aircraft marketplace.”

The US first brought its case against EU subsidies to the WTO in 2004. The WTO subsequently looked into the matter, finding that between 1968 and 2006, Airbus had received $18 billion in subsidised financing from the EU.

The EU and the US are already engaged in a trade battle which has seen extra tariffs placed on goods imported to both regions.

In June 2018, the EU Commission confirmed that it would be imposing a tariff on imports of Bourbon and American whiskey from July, in retaliation to president Donald Trump’s decision to impose a 25% tax on imports on steel.

In July, Canada responded to the US president Donald Trump’s steel and aluminium tariffs with its own countermeasures, imposing tariffs on more than 250 US-made goods – including a 10% tariff on American whiskey – as well as a 25% duty on US metal products.

Mexico also imposed a retaliatory tariff of 25% on US whiskeys, and China introduced a 25% hike on American whiskey imports.

With respect to American whiskey, in a report released at its Annual Economic Briefing in March 2019, the US Distilled Spirits Council reported the imposition of retaliatory tariffs beginning in June 2018 had caused exports to decline by 8.2% between July and November compared to the same period in 2017. But the available data was only through to November, and the council declined to project full year results.