In response to the World Trade Organization's judgment that the EU subsidies to support Airbus were supposedly illegal, the U.S. President Donald Trump threatened to impose tariffs worth $11 billion on European goods and products, ranging from olive oil to wine, aircraft, and cheese.
The U.S. and the European Union have been engaged in a 14-year-long trade dispute over mutual claims of illegal aid to the primary plane manufacturers, Netherlands-based Airbus, and U.S.-based Boeing, to gain an advantage in the world aircraft industry.
Airbus said it saw no legal grounds for the U.S. move while the European Union reportedly was preparing for retaliation.
Following the decision of the World Trade Organization, Trump tweeted on Tuesday that the European Union has taken advantages of our country on trade for a long time, but it would stop soon.
The President's administration released for public consultation the preliminary list of goods subject to additional tariffs. It includes a wide range of cheeses, from pecorino and cheddar to Gouda, fresh or chilled salmon, cashmere sweaters, virgin olive oil, wall clocks, seafood, including octopus and herring, Marsala wines, citrus fruits, fresh or dried, and more.
Furthermore, the list also includes additional import duties on some goods originating from France, Germany, Spain or the United Kingdom. Among them are helicopters, undercarriages used in the civil aviation, and fuselages for use in newly-manufactured airplanes.
The move comes in times of tensions between Washington and Brussels. On the one hand, the European Union is preparing for the upcoming elections to the European Parliament next month. On the other hand, the uncertainty around the Brexit outcome is increasing every hour.
According to Cailin Birch, a global economist at the Economist Intelligence Unit, the timing of the U.S. government to deal with this issue now is worth attention. The Trump administration, explains Birch, has time until mid-May to decide whether to impose tariffs on the automotive imports. In Birch's view, Trump could use the Airbus case as a way out.
Robert Lighthizer, the US Trade Representative, commented that the Oval Office aims to reach an agreement with its European counterparts to end all WTO-inconsistent subsidies to large civil aircraft. Lighthizer also asserted that Washington would lift the additional U.S. duties as soon as Brussels ends the subsidies from its side too.
What do you think? Do you believe Washington and Brussels would find a way to reach an agreement without imposing additional tariffs?