The U.S. is set to levy 25% tariffs on imports of specified European foods in response to the World Trade Organization’s (“WTO”) decision on October 2, 2019, that the European Union (E.U.) provided subsidies to Airbus at the expense of Boeing and the United States. These new tariffs will affect approximately $7.5 billion beginning today, October 18, 2019.
The goods subject to additional tariffs not only include goods that would affect Airbus directly, such as a 10% levy on large civil aircraft, but also products like Irish whiskey, various European cheeses, and other agricultural goods. According to the Office of the U.S. Trade Representative (“USTR”), the bulk of the tariffs are on products primarily from France, Germany, Spain, and the United Kingdom, since they were most responsible for the Airbus subsidies. Click here to view the list of products that are subject to the retaliatory 25% tariffs.
The WTO will rule on the E.U.’s case against Boeing next year, at which point, if it is found that the U.S. provided unfair subsidies to Boeing, the E.U. will be authorized to retaliate. Though WTO rules prevent the E.U. from imposing retaliatory tariffs in the meantime, the risk for escalation of this trade war between the U.S. and Europe is high. According to the Wall Street Journal, European diplomats are considering retaliation prior to their WTO hearing, especially if U.S. president Trump decides to tax cars and auto parts from Europe by November 13, 2019, which is likely as the result of a pending Section 232 action that is currently under review by the White House.
We will continue to monitor this situation and will provide future updates as developments occur. Please contact Husch Blackwell’s International Trade and Supply Chain team for more information.