EU Trumps Trump’s Tariff Threat

 In Allgemeine Nachrichten

Last week I wrote about the tariffs Trump was threatening to install if the EU doesn’t stop subsidizing Airbus. The US released a large list of products that would be hit by these new tariffs.

Game On!

The EU has now countered this threat by releasing a list of its own. The list contains a similarly wide range of products from fish to chemicals to motorcycle and vehicle parts to gaming consoles like the X-Box. The total amount of these tariffs are 20 billion US dollars (17.7 billion euros).

EU Trade Commissioner Cecilia Malmström said: ”European companies must be able to compete on fair and equal terms. The recent WTO ruling on U.S. subsidies for Boeing is important in this respect. We must continue to defend a level-playing field for our industry. But let me be clear, we do not want a tit-for-tat. While we need to be ready with countermeasures in case there is no other way out, I still believe that dialogue is what should prevail between important partners such as the EU and the U.S., including in bringing an end to this long-standing dispute. The EU remains open for discussions with the U.S., provided these are without preconditions and aim at a fair outcome.”

Read the full release here.

EU vs US, or Airbus vs Boeing

The EU and the US have been criticizing each other for years about unfair subsidies for their respective aircraft manufacturers. According to the EU there is illegal support for Boeing:

  • the Washington State tax programme continues to be a central part of the U.S. unlawful subsidisation of Boeing. This is a comprehensive programme scheduled to run up until 2040 with a continuous increase of subsidies expected throughout that period. Boeing will receive an estimated total of USD6 billion in tax savings for the period 2006-2040;
  • A number of ongoing instruments, including certain NASA and U.S. Department of Defence procurement contracts, research and development programmes, and South Carolina job tax credits, constitute subsidies that may cause economic harm to Airbus;
  • Boeing continues to benefit from an illegal U.S. tax concession that supports exports (the Foreign Sales Corporation and Extraterritorial Income Exclusion, or FSC/ETI). This subsidy has already been qualified as prohibited, which means illegal under WTO rules.

A Stand-Off at the Barriers

Last year July Trump and Juncker agreed to stop adding to the existing trade barriers. Last year May Trump installed tariffs on aluminum and steel because “the US was losing billions of dollars in trade with the EU”
Earlier this week the European Commission got approval to start negotiating a limited trade deal with Trump, which Trump and Juncker spoke about earlier.

Casualties of War?

Are you about to become a casualty in this trade war? Check the lists the US and the EU released to see if your products will be hit by the new tariffs. When in doubt, contact one of our customs specialists.

Photo by Glenn Carstens-Peters on Unsplash
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