Europe Braces for $7 Billion U.S. Tariff Hit Over Airbus Dispute

Europe expects the World Trade Organization to give the U.S. the green light to hit the EU with tariffs aimed at products valued at between $5 billion and $7 billion in a 14-year dispute over illegal aircraft subsidies, according to two European government officials.

President Donald Trump’s administration is waiting for the WTO to give its final decision on the damages caused by prohibited European aid for Airbus SE, after which the U.S. would move immediately to impose the tariffs, said the officials, who asked not to be identified because the process is ongoing. The WTO could issue its ruling as soon as this summer.

In addition to helicopters and aircraft parts, the U.S. tariffs may also be aimed at goods such as cheese, olives and pasta, along with some types of whiskey in what the officials see as an effort to gain concessions from EU members to the American agricultural sector. The measures would come on top of duties the U.S. imposed on EU steel and aluminum exports a year ago over claims they posed a national-security threat.

The office of the U.S. Trade Representative previously estimated the EU subsidies to Airbus cause approximately $11 billion in economic harm to the U.S. annually. The EU has a similar case pending against Boeing Co. and has already published a preliminary list of U.S. goods — from ketchup to video-game consoles — being targeted in a $12 billion plan for retaliatory levies.

While the EU has kept the door open to a settlement that would avoid tit-for-tat tariffs, EU Trade Commissioner Cecilia Malmstrom signaled earlier this month that she expected the duties to be imposed.

U.S. and EU Head for Tariffs Over Aircraft Aid, Trade Chief Says

The simmering dispute threatens to push transatlantic relations to a new low and disrupt nascent negotiations launched a year ago to reach across-the-board cuts in industrial tariffs. The EU has also said it is prepared to hit 20 billion euros ($22.5 billion) of U.S. goods with tariffs if Trump follows through on a threat to impose duties on European cars and car parts.

Blow to the Sector

Germany, Austria, the U.K. and Italy are the EU countries with car manufacturing sectors most exposed to direct demand from the U.S.

https://www.bloomberg.com/news/articles/2019-07-15/europe-braces-for-7-billion-u-s-tariff-hit-over-airbus-dispute?srnd=economics-vp

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