EU-US trade conflict, aeroplane edition

Business risk: Tariff risk for EU-to-US exporters and US-to-EU exporters.

Lufthansa Airbus A380 and Boeing 747 (Kiefer)

A long-lasting conflict. For 14 years there’s been a conflict between the EU and the US over their respective subsidies for Airbus and Boeing. Both the EU and the US have filed multiple cases with the World Trade Organization (WTO), and both have been found guilty of breaking WTO rules on subsidies. While most of the conflicting issues have been solved, a few remain.

On March 28, the (WTO) issues a final ruling stating that Boeing and the US have complied with all but one subsidy complaint. The remaining issue is tax reductiongranted by Washington State.

The US reacted (through US Trade Representative Robert Lighthizer):

“This report confirms what every other WTO report on these issues has found: the United States does not provide support even remotely comparable to the exceptionally large and harmful EU subsidies to Airbus, […] It is long past time for the EU to stop their subsidies and let our world-class aircraft manufacturers compete on a truly level playing field,”

Why do I care? I don’t make aeroplanes? The US plans to impose retaliatory tariffs on $11bn worth of goods from the European Union to punish the EU for not fully complying with the WTO rulings. The exact amount depends on arbitration by the WTO (expected in a few months). Aircraft, food products, carpets and table knives are among the products in the preliminary list. (full list)

In good Tit-for-Tat-style, the EU responded that it would impose tariffs on $20bn of US goods. Fish, vegetables, fruit and other foodstuffs, but also wallets and handbags and lots of other stuff on the EU-list. (full list)

A little bit comforting. In contrast to quite some other trade conflicts these days, all this is occurring within WTO rules.

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