The $7.5B in taxes follows WTO ruling over subsidies
The latest escalation in the administration’s tariffs will open a new chapter in the trade wars that are depressing the world economy and heightening fears of a global recession. It comes just as the Trump administration is in the midst of trying to negotiate a resolution to its high-stakes trade war with China.
The administration received a green light earlier Wednesday from the World Trade Organization, which ruled that the United States could impose the tariffs as retaliation for illegal aid that the 28-country EU gave to Airbus in its competition with its American rival Boeing.
Culminating a 15-year fight over the EU’s subsidizing of Airbus, the administration’s Office of the U.S. Trade Representative said it plans to publish a list of targeted products later Wednesday or on Thursday.
A senior administration official, who spoke on condition of anonymity, said that EU aircraft will face a 10% tariff and other products a 25% import tax. The tariffs are intended to pressure the EU into dropping its subsidies for Airbus.
President Donald Trump called the WTO ruling a “big win for the United States“ and asserted that it happened because WTO officials “want to make sure I’m happy.”
“The WTO has been much better to us since I’ve been president because they understand they can’t get away with what they’ve been getting away with for so many years, which is ripping off the United States,” Trump said at a joint White House news conference with President Sauli Niinisto of Finland.
The move escalates uncertainty for the U.S. and global economies at a time when Trump’s trade war with Beijing is weighing heavily on businesses, particularly manufacturers.
The U.S. had prepared for Wednesday’s ruling and already drawn up lists of the dozens of goods it would put tariffs on. They include EU cheeses, olives, and whiskey, as well as planes, helicopters and aircraft parts in the case, though the decision is likely to require fine-tuning of that list if the Trump administration agrees to go for the tariffs.
The tariffs can take effect no earlier than mid-October because a key WTO panel needs to formally sign off on them first. But they will likely have an impact on agricultural and other sectors of the European economy, at a time when other tariff battles have dented global trade growth.
Stock markets around the world, which were already down on concerns for the world economy, added to their losses on the news.
Wednesday’s award follows a WTO ruling in May 2018 that the EU had illegally helped Airbus with subsidies.
However, it does not end the long-running trans-Atlantic dispute over aircraft: WTO arbitrators are expected to rule next year about how much the EU can impose in tariffs following a separate decision that went against Boeing.
The EU’s top trade official said the bloc would prefer to reach a settlement with the United States to avoid a tariff war — but it will respond if U.S. President Donald Trump imposes new duties on EU products.
EU Trade Commissioner Cecilia Malmstrom said a tariff war “would only inflict damage on businesses and citizens on both sides of the Atlantic, and harm global trade and the broader aviation industry at a sensitive time.”
“If the U.S. decides to impose WTO authorized countermeasures, it will be pushing the EU into a situation where we will have no other option than to do the same,“ she said.
Italian Foreign Minister Luigi Di Maio, who was meeting with U.S. Secretary of State Mike Pompeo in Rome on Wednesday, vowed to “defend our businesses.” Italian wine and cheeses could face an impact from U.S. tariffs.
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