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US increases punitive taxes on Airbus aircraft

The United States announced Friday that it will raise the customs taxes imposed on Airbus planes imported from Europe to 15% from March 18, according to a statement by the US Trade Representative (USTR). These taxes have been 10% since last October, when the US government decided to hit $ 7.5 billion in European products from punitive tariffs.

Originally, Washington had taken this action in retaliation against the subsidies received by the European aircraft manufacturer, deemed undue by the World Trade Organization (WTO). Other products – including wine, cheese, coffee and olives – have been taxed at 25% since October. In Europe and the United States, the different sectors concerned hold their breath with each new decision, in the hope that their category will be removed from the list, and in the fear that the tariffs will be increased.

“The spirit drinks industry on both sides of the Atlantic has suffered enough”, reacted Friday the Distilled Spirits Council, an American professional association. She calls on the authorities to withdraw the 25% taxes on American whiskeys on the EU side, and the 25% taxes on liquors imported from 5 European countries, believing that they penalize the economy of the United States and threaten jobs. In October, Delta Air Lines, a US company customer of Airbus, deplored these sanctions, believing that customs tariffs would cause “Serious damage to American airlines, the millions of Americans they employ and travelers.”

A negotiating instrument

But US President Donald Trump also uses these taxes as a negotiating tool. After months of trade war with China, with reciprocal punitive tariffs, he exclaimed “Our strategy has paid off!”, when the two countries signed an agreement in mid-January. His attention is now focused on Europe. Donald Trump and the President of the European Commission, Ursula von der Leyen, indeed announced at the end of January, after a meeting in Davos (Switzerland), their desire to relaunch the transatlantic trade site and to conclude an agreement in the coming weeks.

But for the moment, negotiations have not been successful and relations remain tense as the host of the White House still brandishes the threat of taxing imports of European cars, which particularly shakes German manufacturers. Monday he said it was time to negotiate “Very seriously” a trade agreement with the European Union. He wants EU member countries to open up their markets more to American products, especially agricultural products.

Recently, his administration has threatened to overtax “up to 100%” the equivalent of $ 2.4 billion in French products. Something to thrill the winegrowers, but also the American importers of French wine, who, in a letter to the USTR estimated from 11,200 to 78,600 job losses in the United States if these threats were carried out. French wine growers are claiming from Airbus a compensation fund of up to 300 million euros to compensate them.

“I understand their deep frustration at being taken hostage”reacted Guillaume Faury, the boss of Airbus, during a press conference in Toulouse on Thursday. But “To attack Airbus is to ignore the block-to-block relationship situation in which we find ourselves (…) I think that is not the right solution”, he said.

In October, after 15 years of legal battle, the World Trade Organization (WTO) authorized Washington to take record sanctions, judging that the European aeronautical manufacturer had indeed benefited from undue subsidies. In a mirror procedure, the WTO is expected to authorize the EU in the spring to also impose customs duties in response to undue subsidies paid by the US government to Boeing.

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