The World Trade Organization (WTO) has officially granted the U.S. the ability to impose up to $7.5 billion in tariffs on European exports. The ruling is a result of the EU illegally providing government subsidies for large civil aircraft manufacturing to Airbus.
In a statement released by USTR, U.S. Trade Representative Robert Lighthizer said, “Accordingly, the United States will begin applying WTO-approved tariffs on certain EU goods beginning October 18. We expect to enter into negotiations with the European Union aimed at resolving this issue in a way that will benefit American workers.” The statement goes on to say, “The tariffs will be applied to a range of imports from EU Member States, with the bulk of the tariffs being applied to imports from France, Germany, Spain and the United Kingdom – the four countries responsible for the illegal subsidies. Although USTR has the authority to apply a 100 percent tariff on affected products, at this time the tariff increases will be limited to 10 percent on large civil aircraft and 25 percent on agricultural and other products. The U.S. has the authority to increase the tariffs at any time, or change the products affected.”
The official list of products includes several EU dairy products such as butter, whey protein concentrates, dairy spreads, yogurt and cheese. These products will be subject to additional import duties of 25 percent ad valorem.
In May 2018, the WTO found that EU subsidies for Airbus airplanes had adversely affected U.S. airplane manufacturers and that the United States was entitled to retaliate under WTO’s dispute-settlement system. This past April, USTR proposed retaliatory tariffs totaling $11.2 billion because it estimated that the EU subsidies cost the United States $11 billion in trade each year.
In comments submitted on the matter to USTR, IDFA said the escalation of tariffs with U.S. trading partners is creating uncertainty in the market and causing U.S. companies to lose market share. IDFA supports the United States’ right to retaliate against the EU’s illegal subsidies. However, IDFA remains of the view that establishing a comprehensive trade agreement between the U.S. and EU would be the best solution for U.S. agriculture and the dairy industry.
For more information, contact Beth Hughes, IDFA senior director of international trade.