On November 9, 2020, the European Union announced the imposition of retaliatory tariffs on U.S. goods worth approximately $4 billion stemming from the WTO case alleging the U.S. government has provided illegal subsidies to aircraft maker Boeing. High profile products targeted by the tariffs include fish, cheese, cotton, tractors, spirits, and jets. Of the products affected, Boeing jets will be hit with a 15 percent tariff while select industrial and agricultural goods will face 25 percent tariffs. The tariffs took effect starting November 10, 2020.
These tariffs are the latest development in the long-lasting feud between the U.S. and EU over government subsidies to aircraft manufacturers. In a parallel case involving Airbus, the United States applied WTO-approved tariffs on EU goods worth up to $7.5 billion in October 2019. The U.S. levied tariffs targeting similar industries, including aircraft, wine, cheese, and olives.
The two sides have exchanged proposals for a solution but disagreements over ensuring future compliance and aid repayment have derailed efforts up until this point. The U.S. offered a truce on October 14, 2020 if Airbus agreed to repay state loans at a level of interest assuming a 50% product failure rate, however the EU declined and decided to move forward with tariffs. EU Trade Commissioner Valdis Dombrovskis spoke to EU trade ministers following the news of the new tariffs and said, “we have made clear all along that we want to settle this long-running issue. Regrettably, due to lack of progress with the U.S., we had no other choice but to impose these countermeasures.” The USTR has not issued comments on the new tariffs but it is possible U.S. Trade Representative Robert Lighthizer could opt to impose additional measures.
The EU has called on the U.S. to mutually drop the existing tariffs and expressed hope that a new administration under President-elect Biden will renew efforts to find a solution. Biden has spoken of rebuilding relationships with allies and resolving the Boeing-Airbus dispute would ease trade tensions with trading partners in Europe. However, it remains to be seen if there is any end in sight for the aircraft trade dispute where WTO litigation has been dragging on since 2005.