The US has announced plans to impose tariffs on $7.5 billion worth of European goods after the World Trade Organization (WTO) decided in favour of Washington and gave it permission to levy tariffs on the European Union exports to counteract subsidies to Airbus.
The new duties represent the most significant trade action against the EU since the administration of US President Donald Trump hit the bloc with steel and aluminium duties in 2018.
The move can further sour relations between allies that have long sought to resolve trade disputes without resorting to tariffs.
“The US will begin applying WTO-approved tariffs on certain EU goods beginning October 18,” US Trade Representative Robert Lighthizer said in a statement on Wednesday.
In a long-awaited ruling, the WTO said that Washington may impose trade sanctions worth $7.5 billion annually on the EU. The US’ top trade official explained that, for now, the tariffs increases will be limited to 10 per cent on large civil aircraft that the EU sells to the US and 25 per cent on certain agricultural and other products, according to Efe news.
The most affected countries — as a bulk of the tariffs will be applied to their goods — are set to be France, Germany, Spain and the UK – “the four countries responsible for the illegal subsidies”, said Lighthizer, in reference to the subsidies given to European planemaker Airbus that sparked the ruling by the world trade regulator.
The WTO said that the American aircraft manufacturer Boeing lost the equivalent of $7.5 billion in potential sales due to illegal subsidies that EU governments gave to its European rival Airbus, one of the biggest aircraft manufacturers in the world.
France, Germany, Spain and the UK offered loans to Airbus at a lower interest rate than the market, which allowed the company to develop some of its most recent and advanced models.
“For years, Europe has been providing massive subsidies to Airbus that have seriously injured the US aerospace industry and our workers,” said Lighthizer.
The 15-year-old transatlantic dispute in the WTO could lead to a tariff war between the EU and the US, although the White House has left the door open to negotiate and has asked the WTO to schedule a meeting on October 14 to formally approve the US’ tariffs request.
Fresh cheese, olives, olive oil and pork products of Spanish, German and British origin, as well as French wine, are among the affected products included in a list distributed by the Office of the US Trade Representative.
Yogurts, butter, cherries and peaches from most EU countries will be affected as well.
Trump on Wednesday called the WTO ruling a “big win” for the US.
European Trade Commissioner Cecilia Malmström, meanwhile, said in a statement that any US measure to impose tariffs would be considered “short-sighted and counterproductive”.