Trump administration raises tariffs to 15% on EU aircraft; booze and wine tariffs to stay at 25%

December 24, 2019, West Palm Beach, Florida, USA: President DONALD TRUMP speaks to the media after making a Christmas eve video conference call to members of the armed forces from Mar-a-Lago in Palm Beach, FL. (Richard Graulich/The Palm Beach Post via ZUMA Wire)
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By Bryce Baschuk, Jenny Leonard and Shawn Donnan Bloomberg News (TNS)

WASHINGTON — The U.S. said Friday it will increase the tariff rate imposed on aircraft imported from the European Union to 15% from 10% on March 18.

The move is part of a long-running spat in which the U.S. has sought to penalize the EU for offering illegal subsidies to Airbus SE that harmed American aircraft maker Boeing Co.

The U.S. trade representative said in the statement Friday that the United States is leaving duties on certain other European goods such as Scotch and French wine at 25% and will make minor changes to the previously released product list.

The U.S. is deploying a trade tactic known as carousel retaliation, whereby governments periodically shift duties and tariff rates on different groups of goods in order to increase pain and uncertainty for exporters. On Oct. 18, Washington imposed the original 10% duties on Airbus aircraft and 25% tariffs on a range of European consumer exports, such as cheeses and Spanish olives.

Fifteen years ago the U.S. filed a dispute against the EU’s subsidies for Airbus, and the EU filed a countersuit shortly thereafter. The World Trade Organization has subsequently ruled that both the U.S. and EU were guilty.

The dispute came to a head last fall when the WTO said the U.S. could legally impose tariffs on $7.5 billion of European exports in retaliation for illegal government aid to Airbus. The award was the largest in WTO history — almost twice as large as the previous record of $4.04 billion set in 2002.

At the time the U.S. held off on penalizing certain luxury goods like cognac and handbags, with administration officials saying their goal in imposing the duties was to persuade the EU to negotiate a settlement.

But a trans-Atlantic trade peace has proved elusive and U.S. officials say the EU’s overtures have been unacceptable.

The U.S. trade representative subsequently launched a review of its tariffs and sought input on whether it should remove some products from the October list of tariffs; increase duties on certain goods on that list up to 100%; or impose levies on additional products not included in the October list.

“The longer these disputes are unresolved, the greater the threat of even more tariffs on our industry,” the Distilled Spirits Council of the United States said in a statement Friday. “The EU has stated it may impose retaliatory tariffs this spring on U.S. rum, vodka, and brandy in its parallel case at the WTO concerning Boeing.”

(With assistance from Kim Chipman.)
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