Washington is set to make good on its pledge to retaliate on European Union (EU) goods, including aircraft, in the long-running jet subsidy case. Following the penalty award by the World Trade Organization (WTO) arbitrator, the U.S. announced it will slap 10% tariffs on European-made aircraft as well as 25% duties on other industrial and agricultural products from the EU. Airbus together with its U.S. based customers have expressed deep concerns over the impact that trade sanctions will have on the aviation industry and airlines’ businesses.

On October 2, 2019, the WTO issued its decision on the amount of harm EU subsidies has caused the United States and the level of countermeasures the U.S. may request in the case. As anticipated, Washington was given the go ahead to impose tariffs on $7.5 billion worth of EU exports annually as punishment for the alleged illegal government subsidies to Airbus.

The U.S. President Donald Trump, on his official Twitter account, hailed the WTO ruling as a “nice victory”: “The U.S. won a $7.5 Billion award from the World Trade Organization against the European Union, who has for many years treated the USA very badly on Trade due to Tariffs, Trade Barriers, and more. This case going on for years, a nice victory!”.

The Office of the United States Trade Representative (USTR) was quick to announce on October 2, 2019, that it will be imposing tariffs of 10% on large civil aircraft and 25% on agricultural and other products from the EU “at this time”, stating that “the U.S. has the authority to increase the tariffs at any time or change the products affected”.

The USTR has drawn up a target list of $25 billion worth of EU items it could select from and states that the bulk of tariffs – set to take effect on October 18, 2019 – will be applied to large Airbus aircraft made in France, the UK, Germany and Spain – the four Airbus consortium countries and EU member states cited in the U.S. case before the WTO. 

The United States is expected to be granted approval by the World Trade Organization (WTO) to impose tariffs on European Union (EU) goods, including aircraft and parts, worth up to $8 billion annually, media reports suggest. The decision would open the next chapter in what has been a 15-year-old aircraft subsidy dispute concerning rival plane makers Boeing and Airbus, in which both the U.S. and the EU have their own separate cases before the WTO.

“For years, Europe has been providing massive subsidies to Airbus that have seriously injured the U.S. aerospace industry and our workers. Finally, after 15 years of litigation, the WTO has confirmed that the United States is entitled to impose countermeasures in response to the EU’s illegal subsidies,” U.S. Trade Representative Robert Lighthizer said in an official statement.

“Accordingly, the United States will begin applying WTO-approved tariffs on certain EU goods beginning October 18. We expect to enter into negotiations with the European Union aimed at resolving this issue in a way that will benefit American workers”.