After more than a year-long trade dispute with China, the U.S. is now set to launch a second trade war, this time against its close ally; the European Union due to a ruling by the World Trade Organization (WTO) on Wednesday.
In a 15-year long dispute, the WTO ruled in favor of the US over illegal subsidies and government support programs on European airplane manufacturer Airbus and its American rival Boeing.
EU CAN IMPOSE SANCTIONS ON US PRODUCTIONS
The decision concluded that the EU subsidies to Airbus broke WTO rules, the international regulator said, and allowed Washington to impose countermeasures in the form of tariffs on $7.5 billion worth of European goods in response to the EU’s illegal subsidies.
“The award of $7.5 billion annually is by far the largest award in WTO history,” US Trade Representative Robert Lighthizer said in a statement Wednesday, adding tariffs on EU goods would be applied starting Oct. 18.
10 PERCENT DUTY ON AIRBUS PLANES
The list of levies include a 10 percent duty on Airbus planes, and a 25 percent tariff on French wine, Scotch and Irish whiskies, agricultural products, electromechanical tools and garments once Washington receives final approval from the WTO later this month. “For years, Europe has been providing massive subsidies to Airbus that have seriously injured the US aerospace industry and our workers,” Lighthizer said in a statement.
Airbus released a statement on Wednesday stating that the US’ choice of imposing tariffs on aircrafts and their components would “create insecurity and disruption not only to the aerospace industry, but also to the broader global economy.”
Airbus also stressed that the WTO will determine over the coming months the amount of tariff countermeasures the EU can impose on US products, which includes imported US Boeing aircraft, as part of the parallel counter case regarding illegal subsidies to Boeing.
“If applied, these tariffs on both sides will severely impact US and EU industries, putting high costs on the acquisition of new aircraft for both US and EU airlines,” the statement read.