US threatens to place tariffs on $4 billion worth of EU goods

Just days after the US settled a tariff war with China, the US may escalate another tariff conflict. The US could impose more tariffs on EU (European Union) imports after a subsidy dispute between two of the world’s largest airplane manufacturers: American Boeing and European Airbus.

How Boeing-Airbus dispute could lead to more US-EU tariffs

The conflict between Airbus and Boeing started in 2004. The US first filed a claim with the World Trade Organisation (WTO) alleging that Airbus received $22 million in unauthorised subsidies from the EU. The EU countered with a complaint that Boeing gained illegal subsidies from the US government.

The US Trade Representative’s office said in a statement that it‘s proposing tariffs on $4 billion worth of EU products ‘in order to enforce US rights in the World Trade Organisation (WTO) dispute against the European Union (EU) and certain EU member States regarding EU subsidies on large civil aircraft’.

The EU and Airbus respond to US tariff threat

A European Union spokesperson responded to the US in a statement.

‘The European Union remains open for discussions with the United States, provided these are without preconditions and aim at a fair outcome,’ said the spokesperson.

Airbus responded to the US Trade Representative’s office by saying the WTO should decide who wins the dispute between Airbus and Boeing.

‘This only adds to the trade tensions but in reality, does not change anything. The level of retaliation is up to the WTO to define, not the USTR [US Trade Representative] or Boeing,’ said Airbus.

How could EU tariffs affect US businesses?

The US already imposed tariffs in April on $21 billion worth of European goods, including steel and aluminum. The EU responded by placing tariffs on $3 billion worth of US products. The US also considered higher taxes on imported European cars.

Some of the products that could be impacted by new tariffs include meat, cheese, coffee, and whisky. While the US may impose tariffs to retaliate against the EU, The Distilled Spirits Council of the United States denounced the possible tariffs as potentially being harmful to US businesses.

‘These tariffs, if imposed, will have numerous unintended negative consequences on US jobs, US consumers and on US companies that export to the European Union,’ said the council in a statement.

‘US companies — from farmers, to suppliers to retailers — are already being negatively impacted by the imposition of retaliatory tariffs by key trading partners on certain US distilled spirits resulting from other trade disputes, and these additional tariffs will only inflict further harm,’ added the council.

The WTO will make a final ruling about Airbus subsidies later this year.