FX.co ★ US to raise tariffs on EU aircraft to 15%

Europe’s aircraft industry has been going through hard times. The next month is unlikely to bring about some improvement. The US is adding fuel to the fire as Trump’s administration is due to raise tariffs on EU aircraft from March 2020.

The reason behind this decision is the trade dispute between the US and the EU which has been underway for 15 years. In May 2019, the World Trade Organization concluded that Europe provided illegal financial assistance to Airbus SE, its main plane manufacturer. With the WTO’s decision in favor of the US, Washington imposed a 10% tariff on EU airplanes and a 25% tariff on agricultural items, including wine, cheese, and olives. Such measures were enforced on October 18, 2019.

Thus, the WTO’s ruling permitted the US to introduce tariffs on EU imports worth $7.5 billion per year. In fact, both sides accused each other in the state aid to rival aircraft companies – Airbus and Boeing. So, the question is still open as the EU is waiting for the WTO to decide what retaliatory tariffs the EU can slap on US imports.

The new tariffs on European aircraft will come into force on March 18, 2020. They will be lifted to 15% on aircraft from France, Germany, Spain, and the UK from the previous 10%.

Despite its protectionist rhetoric, the White House is ready to continue the talks and settle the trade conflict. The US is aware that the European Commission is compiling a list of items from the US that will be subject to additional tariffs.