U.S. raises punitive taxes on Airbus planes

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U.S. raises punitive taxes on Airbus planes

February 16, 2020 Finances 0
airbus a380

The United States announced on Friday evening that it would raise to 15% from 18 March the customs duties imposed on Airbus aircraft imported from Europe, while leaving unchanged the tariffs that penalise other sectors on both sides of the Atlantic.

The European aircraft manufacturer reacted on Saturday to a decision which it “deeply regrets” and which, in its view, “creates further instability for US airlines, which are already suffering from a shortage of aircraft”, in particular because of the flight bans imposed on the 737 MAX of its competitor Boeing.

“Our basic position is clear: we reject any unilateral increase in customs duties, which would be harmful to everyone, including the United States,” said a spokeswoman for the German ministry of the economy, contacted by AFP.

The European ministers, who have several meetings scheduled for Monday in Brussels, could take the opportunity to express a common position on the subject.

“We take note of the American decision. We should concentrate our energy on finding a negotiated solution to our differences concerning the air sector on the basis of the concrete solutions proposed by the European Union,” a spokesman for the European Commission said in a statement sent to AFP.

Since October, in retaliation for Airbus subsidies, Washington has imposed punitive tariffs of up to 25% on 7.5 billion dollars worth of imported products (including wine, cheese and olives).

In addition to the 15-year old conflict between Airbus and Boeing through their states, trade tensions between Washington and Brussels have also arisen.

As a result, each time a new decision is taken, the various sectors concerned hold their breath. On Friday, the Distiller Spirits Council, an American trade association, said that “the spirits industry on both sides of the Atlantic has suffered enough”.

Negotiations

But the American President, Donald Trump, also uses these taxes as a negotiating tool.

After China, his attention is now turning to Europe. Donald Trump and the President of the European Commission, Ursula von der Leyen, announced at the end of January, after a meeting in Davos (Switzerland), their intention to relaunch the transatlantic trade yard and to conclude an agreement in the coming weeks.

But the negotiations have not yet been concluded and relations remain tense. The host of the White House is still brandishing the threat of taxing European car imports, which is causing German industrialists in particular to tremble.

On Monday, he said it was time to negotiate “very seriously” a trade agreement with the European Union, calling for increased access for US products, especially agricultural products, to the EU.

Recently, his administration threatened to surcharge “up to 100%” the equivalent of $2.4 billion worth of French products. This is enough to make producers, but also American importers of French wine shudder, who, in a letter to the USTR (Office of the U.S. Trade Representative), estimated that between 11,200 and 78,600 jobs could be lost in the United States.

Frustration

French winegrowers, for their part, have once again asked the government for a compensation fund of 300 million euros. The Federation of Exporters of Wines and Spirits said that “if Airbus is at the heart of the conflict, it is wine which is at the heart of the sanctions”.

“I understand their deep frustration at being taken hostage,” Airbus boss Guillaume Faury told a press conference in Toulouse on Thursday. But “to attack Airbus is to disregard the block-on-block situation we are in (…) I think it is not the right solution,” he said.

The aircraft manufacturer met Friday at its Toulouse headquarters with representatives of the wine industry “in order to establish a shared and united strategy” and to “define joint emergency actions with the French state and the EU in the coming days”, according to a joint statement issued Saturday.

In October, after 15 years of legal battles, the World Trade Organisation (WTO) authorised Washington to impose record sanctions, ruling that Airbus had indeed benefited from undue subsidies.

In a mirror case, the WTO is expected to authorise the EU in spring to also impose tariffs in response to undue subsidies paid by Washington to Boeing.