US, EU Raise 'Airbus Retaliatory Tariffs' from 10% to 15%

[Image source=EPA Yonhap News]

[Asia Economy Reporter Yuri Kim] The Donald Trump administration in the United States is raising some of the retaliatory tariffs imposed on European imports, citing illegal subsidies to the European aircraft manufacturer Airbus.

The U.S. Trade Representative (USTR) announced on the 14th (local time) that it will increase the tariff rate on Airbus aircraft imported from the European Union (EU) from 10% to 15%, and that this measure will take effect from July 18.

This move by the USTR, which plans U.S. trade policy, is a trade retaliation based on a recent WTO ruling. In October last year, the WTO ruled that the EU had provided illegal subsidies to Airbus and authorized the U.S. to impose retaliatory tariffs on EU products worth $7.5 billion annually (approximately 9 trillion KRW). Accordingly, the U.S. imposed a 10% tariff on Airbus aircraft and a 25% tariff on wine, whiskey, cheese, and other products produced in EU member countries.

On the same day, the USTR stated that there will be future adjustments on European products other than aircraft. It also warned that if the EU retaliates by imposing tariffs on U.S. imports in response to this measure, the U.S. may raise tariff rates further.

The U.S. government is pursuing bilateral trade agreements with the EU, following South Korea, Japan, and China. The U.S. and the EU are already in conflict over tariffs on steel and aluminum, as well as digital taxes on major U.S. information technology (IT) companies. There are also heightened tensions over high tariffs on automobiles and auto parts. Concerns have been raised that this measure could escalate tensions between the two sides into a trade war. In particular, the EU won a WTO ruling against U.S. aircraft manufacturer Boeing regarding illegal subsidies, and attention is focused on whether the EU will retaliate in the future. The EU has already stated that it has no choice but to take corresponding measures against the U.S.