EU Announces Official Start of Retaliatory Tariffs in Response to Boeing Subsidies

The European Union will officially increase tariffs Nov. 10 on about $4 billion in U.S. goods due to past tax breaks for Boeing, the European Commission said Nov. 9. The World Trade Organization in October granted the EU permission (see 2010130029) to levy the tariffs, which were also endorsed by WTO members (see 2010280047).

The countermeasures will put the EU “on equal footing” with the U.S., the commission said, and will include additional tariffs of 15% on aircraft and 25% on certain U.S. agricultural and industrial goods. Although the EU will follow through on the tariff increase, the commission said it “stands ready to work with the U.S. to settle this dispute and also to agree on long-term disciplines on aircraft subsidies.” Trade Commissioner Valdis Dombrovskis said the EU has “made clear all along” that it wants to work with the U.S. to find a solution but the two sides have not been able to come to an agreement.

“Regrettably, due to lack of progress with the U.S., we had no other choice but to impose these countermeasures,” Dombrovskis said. “We call on the U.S. to agree to both sides dropping existing countermeasures with immediate effect, so we can quickly put this behind us. Removing these tariffs is a win-win for both sides, especially with the pandemic wreaking havoc on our economies.”

U.S. Trade Representative Robert Lighthizer criticized the EU's move. “The United States is disappointed by the action taken by the EU today,” Lighthizer said in a Nov. 9 statement. “The alleged subsidy to Boeing was repealed seven months ago. The EU has long proclaimed its commitment to following WTO rules, but today’s announcement shows they do so only when convenient to them.”

A Boeing spokesperson called the EU's announcement “disappointing.” “Instead of escalating this any further, we hope that Airbus and the EU will take meaningful action to resolve this trade dispute,” the spokesperson said in a Nov. 9 email.

Some trade groups have voiced concerns about the increased tariffs. The National Association of Beverage Importers told members that it is “deeply disappointed” that both the EU and the U.S. trade representative “have not reached a place for commencing serious settlement negotiations.” The group said it urged both sides to agree to suspend the tariffs for 180 days to try to begin “good fath” negotiations. “Adversely impacted industry members on both sides of the Atlantic are very frustrated with the lack of progress, particularly in light of the current economic downturn in the U.S. and Europe,” th group told members Nov. 9.