EU puts tariffs on US but hopes for change with Biden

The European Union said Monday it would put tariffs on up to $4 billion worth of U.S. goods and services over illegal aid for plane maker Boeing – but expressed hope that trade ties would improve once President Donald Trump leaves office.

European officials agreed on the move a few weeks after international arbitrators gave the EU the green light for such punitive action. The World Trade Organization had deemed illegal some U.S. support for Boeing – which is a bitter rival to Europe’s Airbus – and said the EU could make up for that with a limited amount of penalties on U.S. trade.

“Regrettably, in spite of our best efforts due to the lack of progress from (the) U.S. side, we can confirm that the European Union will later today exercise our rights and impose counter-measures awarded to us by the WTO,” EU Commission Executive Vice-President Valdis Dombrovskis said.

A year ago, the WTO ruled in a similar fashion in favor of the United States, allowing it to slap penalties on EU goods worth up to $7.5 billion – including Gouda cheese, single-malt whiskey and French wine – over European support for Boeing rival Airbus.

After Trump also imposed tariffs on EU steel and aluminum and threatened punitive duties on cars, the Europeans had hoped that he would hold fire on the tariffs related to the Airbus-Boeing dispute. But having repeatedly failed to achieve a negotiated solution, the EU is now ready to announce punishment of its own.

“We call on the U.S. to agree that both sides drop existing counter-measures with immediate effect so that we can quickly put this issue behind us,” Dombrovskis told reporters after the meeting.

“Of course, we remain open for a negotiated solution. Our proposal remains on the table that both sides withdraw their tariffs,” Dombrovskis said, but he noted that despite several appeals, “so far, the U.S. has not agreed to withdraw their tariffs.”

The Europeans are hopeful that Trump’s hardline trade stance will soften when president-elect Joe Biden takes office in January. Dombrovskis welcomed Biden’s commitment to international alliances, the multilateral system and to improving ties with the EU.

German Economy Minister Peter Altmaier, whose country holds the EU’s rotating presidency, said the bloc has “great expectations” and “hope that the U.S. presidential election will also be linked to a return to multilateral approaches to international trade, and that it will be possible to overcome past conflicts.”

In terms of tariffs over Boeing, the EU had released a preliminary list that suggests it could go after a wide range of U.S. products including frozen fish and shellfish, dried fruit, tobacco, rum and vodka, handbags, motorcycle parts and tractors.

The president of the U.S. Distilled Spirits Council, Chris Swonger, said that new tariffs “will be a major blow” to the spirits industry, “especially craft distillers who are struggling to regain their footing following the closings of distillery tasting rooms, restaurants and bars due to COVID-19.” Whiskey exports to the EU have already declined by 41% due to the bloc’s retaliation over Trump’s tariffs on steel and aluminum in 2018.

Just before the Nov. 3 U.S. presidential election, Airbus CEO Guillaume Faury told The Associated Press that his company is “very happy” with the WTO ruling. He lamented the long-running dispute and that “these stories across the Atlantic are really a lose-lose for everyone.”

The Europeans remain reluctant to ramp up trade tensions as the coronavirus pandemic ravages economies around the world.

Some 16 million workers on both sides have jobs that supported by trans-Atlantic trade, the biggest such relationship in the global economy. Even before the pandemic hit, tit-for-tat tariffs over the past four years have affected companies and people making and selling a whole host of goods.

Boeing itself said last month that it will cut 7,000 more jobs as the virus smothers demand for new aircraft and pushed it to a loss.

Peter Chase, senior fellow at the German Marshall Fund think-tank, says the Europeans should hold fire.

“They don’t need to do this now. They don’t need to disrupt trade,” Chase said. Biden “is going to have a lot of constraints and he’s going to have to work first on the domestic issues, both the COVID crisis and the economy. And he’s going to have to do a lot of internal healing. And I think that they should cut him some slack, basically.”