US set to widen trade war with new tariffs on EU aircraft, other goods
BRUSSELS/WASHINGTON: The US won approval on Wednesday to impose import tariffs on US$7.5 billion (S10.4$ billion) worth of European goods over illegal EU subsidies handed to Airbus, threatening to trigger a tit-for-tat transatlantic trade war as the global economy falters.
The decision by the World Trade Organisation pushes a 15-year corporate dispute over illegal support for plane giants to the centre of caustic world trade relations and comes on top of a tariff war between Washington and Beijing.
The US intends to impose new 10 per cent tariffs on aircraft and 25 per cent on agricultural and industrial goods and other European goods starting Oct 18, an official from the US Trade Representative's office said.
The official described the decision as a "significant victory" for the US and said the agency would publish a list of EU goods.
The aircraft tariffs would not apply to aircraft parts, sparing Airbus assembly operations in Alabama from higher costs, as well as shielding European parts used by US plane maker Boeing.
WTO arbitrators said Boeing had lost the equivalent of US$7.5 billion a year in sales and disruption to deliveries of some of its largest aircraft because of cheap European government loans to arch-rival Airbus.
The decision, confirming a figure reported by Reuters last week, allows Washington to target the same value of EU goods, but bars any retaliation against European financial services.
It is part of a two-way dispute that diplomats and trade experts expect to lead to tit-for-tat European import tariffs against US goods next year over state subsidies for Boeing.
The Trump administration asked the WTO for an emergency meeting to give the formal ratification needed for tariffs in mid-October.
Earlier this year, US trade officials floated a US$25 billion list of European targets from planes to helicopters, wine, cheese, spirits and luxury goods.
Goods from European countries that are not part of the Airbus consortium, such as Italy, would still be targeted, a US official said, arguing that all EU nations bear responsibility for the situation.
On Wednesday the pan European STOXX 600 index finished down 2.7 per cent. - REUTERS