US imposes new tariffs on French, German products in Airbus-Boeing spat

The new tariffs are the latest action in the 16-year US-EU dispute over civil aviation subsidies. PHOTO: AFP

WASHINGTON (AFP) - The United States said it will impose additional tariffs on French and German products as part of a long-running dispute over subsidies for aircraft manufacturers Airbus and Boeing.

The tariffs are on "aircraft manufacturing parts from France and Germany, certain non-sparkling wine from France and Germany, and certain cognac and other grape brandies from France and Germany", which will be added to the list of products taxed since 2019, according to a statement from the US Trade Representative.

It said the move was in retaliation to tariffs imposed by the European Union which it considers unfair.

The decision is the latest twist in the 16-year trade battle over aircraft subsidies that turned increasingly sour under the protectionist instincts of US President Donald Trump, and comes despite hopes for a trade truce following Democrat Joe Biden's election.

The EU was authorised this year by the World Trade Organisation (WTO) to levy additional customs duties on American products.

But Washington believes it has been penalised by the method of calculation chosen, which, according to the Trump administration, has led to an excessive amount of customs duties levied on American products.

"In implementing its tariffs...the EU used trade data from a period in which trade volumes had been drastically reduced due to the horrific effects on the global economy from the Covid-19 virus," the US Trade Representative statement said.

"The result of this choice was that Europe imposed tariffs on substantially more products than would have been covered if it had utilised a normal period. Although the United States explained to the EU the distortive effect of its selected time period, the EU refused to change its approach," the statement said.

As a result, the US "is forced to change its reference period to the same period used by the European Union", it continued.

The US also deplored an EU decision to exclude the United Kingdom from its calculations, which it argued unfairly increased the tariffs.

The feud over European aircraft manufacturer Airbus and its American competitor Boeing is the longest and most complicated ever handled by the WTO.

The aviation feud predates Mr Trump, but Washington quickly embraced the opportunity to impose US$7.5 billion (S$9.9 billion) in tariffs against Europeans after also being cleared to do so by the WTO last year.

Washington imposed punitive tariffs of 25 per cent on iconic EU products such as wine, cheese and olive oil and put a 15 per cent tariff on Airbus planes in March.

In retaliation, the EU has been imposing customs duties on US$4 billion of American exports since the beginning of November.

Join ST's Telegram channel and get the latest breaking news delivered to you.