On Wednesday, the United States will impose 10% tariffs on European-made Airbus planes and 25% on French wine, Scotch and Irish whiskies, and cheese from across the continent as punishment for illegal EU aircraft subsidies.
The announcement comes after the World Trade Organization gave Washington permission to impose tariffs on $7.5 billion worth of EU goods annually in the long-running case, a move that threatens to ignite a tit-for-tat transatlantic trade war.
The standards will follow tariffs imposed by the United States and China on hundreds of billions of dollars of each other’s good in their more than the year-old trade war.
The US trade representative’s target list for EU tariffs is ready to get effective on Oct 18. It includes large Airbus planes made in France, Germany, Britain, and Spain – the four Airbus consortium countries but no tariffs will be imposed on EU-made aircraft parts that are used in Airbus’ Alabama assembly operations or those used by rival US planemaker Boeing Co, safeguarding US manufacturing jobs.
US Trade Representative Robert Lighthizer said in a statement, “Finally, after 15 years of litigation, the WTO has confirmed that the United States is entitled to impose countermeasures in response to the EU’s illegal subsidies.”
“We expect to enter into negotiations with the European Union aimed at resolving this issue in a way that will benefit American workers,” Lighthizer added.
Earlier this year, the size and scope of the tariffs were reduced considerably from a $25 billion list floated by Washington that included helicopters, major aircraft components, seafood, luxury goods and other big-ticket categories that were omitted from Wednesday’s announcement.
The USTR was not deliberately using the full extent of WTO-approved retaliation to coax the EU to the negotiating table, said one person familiar in the case. However, it came with a specific warning. “The US has the authority to increase the tariffs at any time, or change the products affected USTR will continually re-evaluate these tariffs based on our discussions with the EU,” the USTR said.