Washington raises tariffs on European aircraft to 15%

Bloomberg

The US said it will increase the tariff rate imposed on aircraft imported from the European Union (EU) to 15% from 10% on March 18.
The move is part of a long-running spat in which the US has sought to penalise the EU for offering illegal subsidies to Airbus SE that harmed American aircraft maker Boeing Co.
The US Trade Representative said in the statement that it is leaving duties on certain other European goods at 25% and will make minor changes to the previously released product list.
The US is deploying a trade tactic known as carousel retaliation, whereby governments periodically shift duties and tariff rates on different groups of goods in order to increase pain and uncertainty for exporters. On October 18, Washington imposed the original 10% duties on Airbus aircraft and 25% tariffs on a range of European consumer exports, like cheeses and Spanish olives.
The US list continued to spare an Alabama Airbus plant that assembles single-aisle aircraft like the A320 by not hitting airplane parts. But the higher tariffs will hit wide body Airbus models not assembled in the US and mean higher prices for those models for US airlines that have orders on the books.
Both Boeing and Airbus have pushed US and EU officials to try and reach a negotiated settlement.
Fifteen years ago the US filed a dispute against the EU’s subsidies for Airbus, and the EU filed a counter-suit shortly thereafter. The WTO has subsequently ruled that both the US and EU were guilty.
The dispute came to a head last fall when WTO said the US could legally impose tariffs on $7.5 billion of European exports in retaliation for illegal government aid to Airbus. The award was largest in WTO history — almost twice as large as the previous record of $4.04 billion set in 2002.
At the time the US held off on penalisng certain luxury goods like handbags, with administration officials saying their goal in imposing the duties was to
persuade the EU to negotiate a settlement.

But a transatlantic trade peace has proved elusive and US officials say the EU’s overtures have been unacceptable.
The US Trade Representative subsequently launched a review of its tariffs and sought input on whether it should remove some products from the October list of tariffs; increase duties on certain goods on that list up to 100%; or impose levies on additional products not included in the October list.
“The longer these disputes are unresolved, the greater the threat of even more tariffs on our industry,” the Distilled Spirits Council of the United States said in a statement. “The EU has stated it may impose retaliatory tariffs this spring in its parallel case at the WTO concerning Boeing.”

Italy escapes new round of US tariffs
Bloomberg

Italy escaped a new round of US trade tariffs on European goods after directly lobbying US government officials.
“Italy today emerges undamaged from the revision of the list of products subjected to tariffs imposed by the US last October,” Foreign Minister Luigi Di Maio said in a statement on Saturday. “Olive oil and the other Italian products that risked tariffs as much as 100% are safe.”
In a sign of delicate economic environment facing European nations, Italy reached out directly to the US Ivan Scalfarotto, undersecretary at foreign ministry, told Bloomberg that Italy deserves special treatment because it’s not part of the Airbus SE
consortium at the heart of a long-running trade dispute between Europe and the US. He discussed the issue with US officials last month.
“We’re doing everything possible to limit the impact on Italy, but the Americans have the upper hand,” said Scalfarotto, from the small Italy Alive party led by ex-premier Matteo Renzi. “Italy isn’t part of the Airbus consortium, and tariffs will have a cost for American companies, restaurants, families.”
US President Donald Trump’s administration said it will increase the tariff rate imposed on aircraft imported from the European Union to 15% from 10% on March 18. Last fall, the World Trade Organisation said the US could legally impose tariffs on $7.5 billion worth of European exports in retaliation for Europe’s aid to Airbus.
In October, the US imposed 10% duties on Airbus aircraft and 25% tariffs on a range of European consumer exports including Scotch whisky, French wine and Spanish olives.
Scalfarotto pressed Italy’s case in Washington in late January, meeting with senior officials at the White House, the State Department, the Commerce Department and the US Trade Representative, as well as lawmakers from both houses of Congress. He said they gave him no assurances.
Italy is in danger of missing its already unambitious growth targets for 2020 because of the coronavirus outbreak, Deputy Finance Minister Antonio Misiani said in an interview on Wednesday. The government targets 0.6% growth for this year, and output unexpectedly shrank 0.3 percentage points in the final quarter of 2019.