With another week, a new set in the constantly-shifting tariff landscape is happening soon. The long-discussed tariffs on European products due to a long-running WTO dispute over improper subsidies given to aircraft manufacturer Airbus in the early 2000s.
The new tariffs will increase duty rates from the current 10% to 15% on aircraft from Airbus starting March 18th. Additionally, many other European products, including alcohol, wine, cheese, metals, and many manufacturing goods will have a 25% duty rate.
These duties come from a long-running legal saga that began with the Bush administration filing a grievance with the WTO that European countries had improperly subsidized the operation of Airbus, in violation of international free trade laws. A decision recently came down that ruled in favor of the USA, authorizing an increase in tariffs. This was eagerly embraced by the Trump administration, which has shown a clear preference in using tariffs as a negotiation tool.
This will only affect finished aircraft at this time, and won’t be hitting products like aircraft parts, so Airbus’ Alabama manufacturing plant, as well as a large amount of US manufacturers that rely on a European supply base will not be hit by the new tariffs.
A concurrent lawsuit against American manufacturing giant Boeing is coming to a conclusion soon as well and could lead to retaliatory tariffs against its planes being exported. There has been warning of potential further retaliation if this is carried out, and so this could be an area where additional tariffs out of Europe could increase soon.
Duties on Airbus aircraft as well as all the other products designated from Europe are fully eligible for drawback, as they are being imposed under section 301, the same that has been used as legal justification on the tariffs applied to imports from China.
Sincerely, James Rodgers