Additional annual tariffs from the US on Airbus commercial aircraft — among other European products — will kick in as early as 18 October.
The Office of the US Trade Representative (USTR) shed more light on its intended moves, hours after a World Trade Organization (WTO) arbitrator issued a landmark decision that will allow the US to impose $7.5 billion worth of tariffs on European products.
At the centre of the ruling were EU subsidies for Airbus, which the arbitrator heavily criticised as being “WTO-inconsistent”, and causing adverse effects to the US.
While the USTR is allowed to impose up to 100% tariffs on $7.5 billion of goods — including Airbus jets —the office says it will initially impose 10% levies on new commercial aircraft of more than 30 tonnes, and 25% levies on other products such as Irish and Scotch whiskies, German machinery, and cheese.
"Although USTR has the authority to apply a 100 percent tariff on affected products, at this time the tariff increases will be limited to 10 percent on large civil aircraft and 25 percent on agricultural and other products," it says.
"The US has the authority to increase the tariffs at any time, or change the products affected," the office adds.
The USTR adds that the bulk of the duties imposed will be to imports from France, Germany, Spain and the United Kingdom, countries it says are “responsible for the illegal subsidies”.
Both Boeing and Airbus, which have for decades accused each other receiving illegal government subsidies, have responded to the WTO ruling.
Boeing told FlightGlobal that Airbus’ non-compliance with WTO rulings “will negatively impact European member states, industries and businesses completely unrelated to Airbus’s actions, as well as Airbus’s airline customers”.
Separately, Airbus said in a statement that it hopes for a"negotiated solution”. The European airframer warned that tariffs would hinder free trade, elevate aircraft costs and negatively impact US jobs, airlines, air travellers and aircraft component suppliers.
"Airbus is therefore hopeful that the US and the EU will agree to find a negotiated solution before creating serious damage to the aviation industry as well as to trade relations and the global economy," Airbus chief executive Guillaume Faury said, in the wake of the ruling.
The company has a large presence in the USA, including an A320 and A220 assembly site in Mobile, Alabama. It says 40% of its aircraft-related procurement comes from US companies. The ruling, which applies to aircraft built in Europe, means that parts shipped over the Mobile to be assembled appears to be exempt from the additional tariffs.
The US will be allowed to impose the tariffs until the EU brings its practices into compliance with WTO standards.
In arriving at the $7.5 billion pricetag, the arbitrator took into account the value of the lost sales of large Boeing aircraft as a result of the subsidies.
In the aftermath of the latest ruling, US trade representative Robert Lighthizer says: “For years, Europe has been providing massive subsidies to Airbus that have seriously injured the US aerospace industry and our workers. 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.”
The WTO is set to rule on Boeing’s subsidies early next year, which could pave the way for the EU to hit back at the American airframer with tariffs.