US Increases Tariffs on German and French Wines Over ‘Unfair’ Airbus Subsidies

The 16-year long battle between the US and the EU over aerospace subsidies to Boeing and Airbus has turned even more bitter, with the US announcing it will increase tariffs on several European goods.

According to Reuters, the US Trade Representative’s office (USTR) declared that it would raise dues on certain German and French spirits and wines as well as aircraft related parts, citing unfair EU subsidies to Airbus as the catalyst behind the decision. Although the USTR did not elaborate on when the new tariffs would take effect or their rate, it did note that additional details will be “forthcoming.”

Airbus and Boeing have been embroiled in a quarrel over subsidies that has spanned for more than 16 years, with no sign of resolution anytime soon. Tit-for-tat duties between the two have already affected $11.5 billion worth of trade, and will likely continue to escalate into 2021. Last year, the World Trade Organization (WTO) declared that the EU did not adhere to international rules when it provided Airbus with subsidies, and in response the US was allowed to impose levies on $7.5 billion worth of European goods.

Earlier this year though, the WTO also ruled that the US similarly failed to meet international regulations with its subsidies to Boeing, and in response allowed the EU to impose $4 billion worth of tariffs on American imports in November. However, the EU’s latest tariffs apparently did not sit well with Washington, with the US accusing the EU of unfair tariff calculations against Boeing aircraft and equipment. “The EU needs to take some measure to compensate for this unfairness,” the USTR said on Wednesday.

In response to the USTR’s latest tariffs, Airbus warned that it could backfire and end up hurting American workers in the long run. “USTR’s expansion of tariffs to include components for aircraft manufactured in the US— by American workers— is counterproductive in every way,” notes an Airbus spokesperson to Reuters. Likewise, the European Commission on Thursday said that Washington’s most recent move will only disrupt ongoing attempts to settle the 16-year-long running dispute.

Information for this briefing was found via Reuters and the US Census Bureau. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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