The White House Office of the U.S. Trade Representative announced Monday that it would pursue tariffs against a broad collection of aircraft and aircraft parts from the European Union. In addition it said it is considering imposing tariffs on products as diverse as swordfish, brandy and brooms from countries in the European Union.
It said the tariffs were meant to force action in a long-running trade dispute involving the European aircraft giant Airbus and estimated that the harm caused by a broad range of E.U. subsidies amounted to $11 billion each year.
The action comes as U.S. aerospace giant Boeing grapples with the fallout from two deadly crashes involving its 737 Max planes, which have been grounded globally.
The U.S. trade authority released a preliminary list of products to be covered by the additional import duties, including helicopters, passenger and cargo aircraft, fuselages, and other aircraft parts. It excluded aircraft sold to the U.S. military.
“Our ultimate goal is to reach an agreement with the EU to end all WTO-inconsistent subsidies to large civil aircraft,” the U.S. trade representative, Robert E. Lighthizer, said in a statement. “When the EU ends these harmful subsidies, the additional U.S. duties imposed in response can be lifted.”
The move was met with immediate consternation abroad. A spokesman for the European Commission, the governing body of the European Union, said the commission would “promptly take action” in what it said was a Boeing-related dispute.
“The Commission is starting preparations so that the EU can promptly take action based on the arbitrator’s decision on retaliation rights in this [Boeing] case,” a Commission spokesman said, according to Reuters. “The European Union remains open for discussions with the United States, provided these are without preconditions and aim at a fair outcome.”
President Trump said early Tuesday in a tweet that the E.U. had “taken advantage” of the U.S. on trade for many years.
“The World Trade Organization finds that the European Union subsidies to Airbus has adversely impacted the United States, which will now put Tariffs on $11 billion of EU products! The EU has taken advantage of the U.S. on trade for many years. It will soon stop!” Trump said on Twitter.
The USTR’s initial announcement did not say what rate should be imposed on the aircraft and related parts. If the tariff rate is high enough it could entirely shut Airbus out of the U.S. aviation market.
The move by the U.S. trade representative follows separate WTO findings that both Boeing and Airbus ― which compete in the commercial jetliner market ― are subsidized.
The import duties would be imposed depending on the outcome of a World Trade Organization case over subsidies awarded to Airbus, which is expected to be resolved this Summer.
If tariffs were imposed on Airbus jets it could significantly benefit Boeing’s U.S. prospects, although the company could be caught up in E.U. retaliation abroad.
Airbus jets including the A320 Neo compete closely with Boeing for U.S. airlines’ business. The U.S. trade representative asked for tariffs on E.U. aircraft with an unladen weight of at least 15,000 Kg., which would include essentially all of Airbus’ major commercial jets.
Last year Boeing lost a year-long campaign to impose tariffs on narrow-body jets produced by Bombardier, a Canadian jet-maker. In 2017 the Wilbur Ross-led Commerce Department imposed 300 percent tariffs on Canadian jets in response to a petition from Boeing. Bombardier responded by selling a controlling stake in its 100- to 150-seat C-series to Airbus.
The International Trade Commission, a quasi-judicial U.S. agency that rules on tariff disputes, swept away the tariffs when it ruled in a 4-0 vote that Boeing had not been materially injured by Canadian subsidies. Boeing has since completed a merger with Brazil’s Embraer, which makes a narrow-body jet of its own.
The revived tariff row comes at a time of tremendous business uncertainty for Boeing.
Boeing’s stock price dropped by 4.4 percent Monday after the company disclosed that it would slow production of its 737 Max commercial jet, the newest version of its most profitable airplane.
At more than $17 below its previous close, Boeing accounted for the Dow Jones industrial average’s entire loss Monday. That’s a far cry from the company’s bullish 2017 and 2018, when it tended to lead major indexes. The company’s stock price, $374.52, is still more than double its 2016 peak.