The European Union (EU) warned on Tuesday, October 13, 2020, that it sought plans to impose $4 billion worth tariffs on the United States (US) goods import in retaliation against Washington’s moves that placed a series of duties on EU imports. The latest move of the EU is expected to renew the existing trade fight between the two powers and deepened the animosity since the European organization targeted over the subsidies issues for American planemaker, Boeing.
The trade dispute between the two powers has escalated after a WTO ruling last year allowed Washington to impose tariffs on $7.5 billion in EU goods over state support for Airbus, which has sites in Britain, France, Germany, and Spain. Moreover, the US recently slapped heavy duties on goods imported from European countries including wine and whiskey, which had majorly affected the revenue of several French companies.
Nevertheless, the European Commission said that it would reverse its decision of tariffs on the US goods if Washington agreed to withdraw its tariffs on European goods such as wine and whisky. As Reuters reported, there was no immediate comment from the US Trade Representative regarding the EU’s latest move.
EU’s Retaliation on US Tariffs
The EU’s move for a tariff deal, which was first reported by Reuters on September 30, could spark a new transatlantic trade tension and stage a political problem as the US presidential election is nearly three weeks away. However, analysts believed that the US reply could be possible after the election or after a World Trade Organization (WTO) meeting on October 26.
In Tuesday’s tariff decision, the Commission has announced and listed a series of US products upon which it can impose tariffs on including planes, wine, spirits, suitcases, tractors, frozen fish, and produce from dried onions to cherries. In addition to this, some sources European reported that the EU could also use dormant tariffs on a further $4 billion of US products leftover from an earlier case, citing a similar position that Washington could also use.
Meanwhile, analysts suggested that if a negotiation emerged between the powers, it could end the 16-year prolonged legal battle with respect to issues related to both sides’ plane makers, Boeing and Airbus. According to reports, the legal battle has already cost an estimated $100 million since 2004 over the aircraft dispute, which is expected to test to resolve a prolonged issue of the WTO.
Boeing and Airbus Disputes
For over long years, both the US and the EU have been struggling to settle the dispute over subsidies each provided to their respective plane makers, Boeing and Airbus, while accusing the other of refusing to talk seriously.
Following the latest EU decision, Boeing replied that the EU had no valid reason to impose the tariffs since the planemaker had been complying with WTO findings. While claiming to be in compliance with the WTO rulings, Airbus said that the EU called for a solution with its latest move. Meanwhile, Boeing’s top European customer Ryanair has urged Boeing to pay the tariffs and expected to use this as leverage in negotiations to buy more of its grounded 737 MAX.
As per the sources, the $4 billion tariffs of the EU would allow the Commission to impose the current rate of 15% tariffs on European airlines that import Boeing jets. The step was a response to match the imposition of duties on imports of European Airbus jets.
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