US cranks up tariff heat on France, Germany in Airbus dispute

The amount of products subject to countermeasures remains at RM31.5b and the tariff rates stay at 15% for aircraft and 25% for all other products

LONDON • The US stepped up pressure on Germany and France with extra tariffs on some of their goods, a move designed to squeeze the European Union (EU) into settling a long-running dispute over illegal subsidies to Airbus SE.

In a statement in Washington on Wednesday, the US Trade Representative’s (USTR) office said it’s removing from the tariff list certain products from Greece and the UK, and adding an equivalent amount of trade from France and Germany. The change is effective Sept 1 and will apply to French and German jams as well as butchers’ and mincing knives, which will be subjected to a 25% duty.

“The EU and member states have not taken the actions necessary to come into compliance with World Trade Organisation (WTO) decisions,” USTR Robert Lighthizer said in the statement. “The US, however, is committed to obtaining a long-term resolution to this dispute.”

The amount of products subject to countermeasures remains at US$7.5 billion (RM31.5 billion) and the tariff rates stay at 15% for aircraft and 25% for all other products, the USTR said.

Sweet biscuits were exempted in the latest review, and Britain’s gin industry was spared tariffs that the US had included on a list of potential targets. But duties on another big UK spirits industry remained.

“I welcome the decision not to impose tariffs on gin and blended whiskey, and to remove tariffs on shortbread. But there are still tariffs on goods like single-malt Scotch. These tariffs are in no one’s interests. I am in further talks with USTR to remove them asap,” UK International Trade Secretary Liz Truss said in a Twitter post yesterday.

Airbus said it “profoundly regrets” the US’ decision to maintain the tariffs despite Europe’s recent actions to achieve full compliance “at a time when aviation and other sectors are going through an unprecedented crisis”.

“Airbus trusts that Europe will respond appropriately to defend its interests and the interests of all the European companies and sectors, including Airbus, targeted by these tariffs,” it said in a statement.

The announcement prolongs the burden of import taxes on Ameri- can businesses and consumers, while increasing the pain on transatlantic allies just as the global economy tries to claw back from a steep downturn tied to the Covid-19 pandemic. US retailers, restaurants and importers that are struggling to stay afloat after nearly six months of restrictions and lockdowns had pleaded with USTR for tariff relief.

“There is clear evidence that the US beverage alcohol industry has been negatively impacted as a direct result of these tariffs, which is now being compounded by the impact of restrictions related to preventing the spread of Covid-19,” a group of US trade associations wrote in a letter to USTR, one of nearly 24,000 public comments submitted in the case.

The Trump administration won a long-awaited judgement from the WTO last October stemming from a dispute between Airbus and Boeing Co that dragged on for more than 15 years. The ruling authorised tariffs on a record US$7.5 billion in European imports.

The EU, meanwhile, is waiting for a WTO decision to come as early as September that may allow for retaliation against the US. Brussels has asked for its own multibillion-dollar award in a separate case that found Chicago-based Boeing received illegal subsidies. — Bloomberg