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Saturday, October 5, 2019

Trump to enact $7.5 billion in tariffs on EU imports following WTO ruling

The Trump administration plans to enact new 10-25% tariffs on about $7.5 billion worth of European Union products starting on Oct. 18. The move follows a ruling Wednesday by the World Trade Organization that the EU had been subsidizing Airbus, giving the U.S. a significant victory in a 15 year-long legal fight over aviation subsidies.
"The United States will have to move forward with countermeasures authorized by the WTO until the EU finally takes action to stop breaking the rules and harming U.S. interests," said a senior official with the U.S. Trade Representative's Office. "Accordingly, the USTR is taking action to enforce our rights."
The USTR has requested an Oct. 14 meeting with the WTO to gain formal authorization to enact the tariffs. The administration will place 10% tariffs on EU aircraft and aircraft industry products and 25% tariffs on various farm goods and industrial products, with an official list to be published later Wednesday. The administration has previously said it would plan tariffs on cheese, olive oil, fruit juice, jelly, seafood, wine, and textiles.
While Wednesday's ruling allowed tariffs on $7.5 billion worth of goods, the White House had initially requested $11 billion. President Trump nevertheless declared the ruling a vindication for the U.S..
"That was a big win with the WTO," he told reporters Wednesday. "All of those countries were ripping off the U.S. That was a $7 billion win."
EU officials have long disputed that their policies amount to a subsidy program. European Trade Commissioner Cecilia Malmstrom warned the U.S. against enacting new tariffs. "We remain of the view that even if the United States obtains authorisation from the WTO Dispute Settlement Body, opting for applying countermeasures now would be short-sighted and counterproductive," she said in a statement provided by the European Commission.
White House officials noted that the WTO ruling allowed tariffs as high as 100%. They said the administration decided on lower rates in response to public comments about its tariffs proposals. The officials added that the tariffs would be dropped if the Airbus subsidies were eliminated.
"We stand ready and willing to negotiate. We are hopeful that that the addition of the tariffs will lead to that negotiation," a USTR official said.
The U.S. and EU have been fighting since 2004 over whether their respective aerospace industry policies toward Airbus and Boeing amount to unfair practices. The WTO's ruling said the EU subsidized Airbus by giving it preferential treatment on interest rates.
"The Appellate Body upheld the Panel’s findings that Airbus paid a lower interest rate ... than would have been available to it on the market and, consequently, a benefit was thereby conferred," the WTO ruled.
EU officials have countered that the U.S. unfairly subsidizes Boeing. The alleged subsidy was a $100 million tax break given to Boeing from Washington state, not a federal government policy.

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