EU announces tariffs on $ 4 billion in US goods

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Last month, the World Trade Organization paved the way for the imposition of tariffs on U.S. exports, including aircraft, when it ruled in favor of the European Union in the context of ” a long-standing dispute over U.S. subsidies to Boeing (BA) and EU aid to rival aircraft manufacturer Airbus (EADSF). The European Commission said the tariffs would go into effect on Tuesday.

The WTO ruling follows a similar ruling last year in favor of the United States, which led the Trump administration to impose tariffs on European products, including civilian planes, Parmesan, French wine and Scottish and Irish whiskeys. EU officials made it clear on Monday that they would prefer both sides to drop the measures.

Tariffs act as a tax on exports and are either absorbed by producers as reduced profits or passed on to consumers at higher prices.

“We have made it clear at every step that we want to address this long-standing problem,” European Commission Executive Vice-President Valdis Dombrovskis told reporters at a press conference. “Unfortunately, for lack of progress with the United States, we had no choice but to impose these countermeasures,” he added.

Additional tariffs of up to 15% on planes will deal another blow to Boeing, which is already grappling with a sales slump amid aviation’s worst crisis and ongoing struggles over the ailing 737 Max . Other US products to tax include ketchup, tree nuts, wheat, grains, and sunflower oil.

Will Biden Boost Transatlantic Trade?

The EU’s decision to go ahead with tariffs is unlikely to escalate the transatlantic trade tensions that erupted under US President Donald Trump. That’s because the tariffs were expected and President-elect Joe Biden will likely take a more conciliatory approach to America’s dealings with allies such as Europe.

“We wouldn’t be surprised if the US and the EU defused or even fixed [the Airbus-Boeing] dispute shortly after the Biden administration took office on January 20, 2021, “Holger Schmieding, Berenberg’s chief economist, said Monday in a research note. In a report released last week, Schmieding said that under Biden, the two sides might even consider entering into a free trade deal.

It could be a “somewhat meager version of the transatlantic trade and investment partnership that the EU and the United States had discussed until Trump withdrew from negotiations just after taking office in 2017,” said he explained.

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David O’Sullivan, EU Ambassador to the United States from 2014 to 2019, echoed these sentiments. Writing in The Irish Times on Monday, he said Biden’s arrival at the White House “offers a unique opportunity to restart the transatlantic alliance,” which has suffered under Trump.

A “useful start” to find a new balance in the trade relationship would be “to end the Airbus-Boeing dispute and eliminate tariffs on industrial products,” he added.

European Commission President Ursula von der Leyen appealed to the historic ties between the European Union and the United States in a statement on Saturday in which she congratulated Biden on his victory and called for a “renewed partnership”.

“The European Union and the United States are friends and allies,” she said, adding that the European Commission “is ready to step up cooperation with the new administration”, including on issues such as pandemic and climate change.

Biden has already pledged to join the Paris climate agreement and the World Health Organization, signaling that he plans to take a more open approach to U.S. foreign policy than his predecessor.
But all the changes that have taken place under Trump in international trade are unlikely to be reversed under Biden. This is because there has been a general shift in trade liberalization in recent years, as highlighted by Brexit and trade elsewhere, such as between China and Australia.

In line with this change, “Biden may also pursue trade policies more focused on protecting existing jobs in the country than opening up new opportunities through freer trade,” Schmieding said.

“Trade liberalization [in the United States] is largely off the agenda at the moment, “said Jon Lieber, general manager of Eurasia Group’s US practice, in a briefing last week.

– James Frater contributed reporting.

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