Blow to Airbus: US Further Increases Tariffs on Aircraft from EU

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The long-lasting dispute over subsidies to aircraft manufacturers is intensifying. The United States has announced that starting March, 2020, it is raising tariffs on aircraft imported from the European Union from 10% to 15%.

Although the tariff is set on a variety of products imported from the EU, ranging from some types of meat, cheese, whiskey to books and copper, the main target of the latest changes was Airbus aircraft and the countries that produce it – the UK, Spain, Germany and France.

In October, 2019, the World Trade Organization (WTO) gave the US a permission to impose tariffs on $7.5 billion worth of EU goods annually, including 10% duties on aircraft.

This was a huge blow to Airbus, however, the recent move, in response to illegal subsidies received by Airbus, has been even stronger.

According to the US Trade Representative (USTR), it considered putting up the tariff rate as high as 100%. Nevertheless, the authority received over 26,000 responses after it requested the comments on a review of the tariffs in the middle of December, 2019, and decided to increase duties only by 5%.

Airbus, in turn, has criticized the decision and said it “deeply regrets” that the US implemented this measure. According to the European aerospace giant this move “further escalates trade tensions between the US and the EU, thereby creating more instability for US airlines that are already suffering from a shortage of aircraft”.

No doubts that Airbus refers to Boeing 737 MAX aircraft which has been grounded in March, 2019. The largest US carriers are currently suffering from the lack of planes to operate on the routes initially planned for the MAX aircraft. Therefore, such a drastic step with tariffs will, primarily, impact the US aviation industry and its flying public.

Airbus said it is will continue “discussions with its US customers and work with them to mitigate effects of tariffs insofar as possible”.

“Airbus hopes that USTR’s position will change, especially when the WTO will authorize the EU to impose tariffs on Boeing aircraft, including the 737Max, 787 and 777 aircraft in the May/June timeframe”, the airframer said in a statement.