The United States on Wednesday said it would slap 10% tariffs on European-made Airbus planes and 25% duties on French wine, Scotch and Irish whiskies, and cheese from across the continent as punishment for illegal EU aircraft subsidies. The announcement came after the World Trade Organization gave Washington a green light to impose tariffs on $7.5 billion (6.1 billion pounds) worth of EU goods annually in the long-running case, a move that threatens to ignite a tit-for-tat transatlantic trade war. The measures would follow tariffs levied by the United States and China on hundreds of billions of dollars of each other's goods in their more than year-old trade war.
The US trade representative's target list for EU tariffs, set to take effect on Oct 18, includes large Airbus planes made in France, Britain, Germany and Spain - the four Airbus consortium countries but no tariffs will be imposed on EU-made aircraft parts used in Airbus' Alabama assembly operations or those used by rival US planemaker Boeing Co, safeguarding US manufacturing jobs.
"Finally, after 15 years of litigation, the WTO has confirmed that the United States is entitled to impose countermeasures in response to the EU's illegal subsidies," US Trade Representative Robert Lighthizer said in a statement.
"We expect to enter into negotiations with the European Union aimed at resolving this issue in a way that will benefit American workers," Lighthizer added.
The tariffs heavily target the four Airbus consortium countries, including Spanish olives, British sweaters and woollens, and German tools and coffee, as well as British whisky and French wine Cheese from nearly every EU country will be hit with the 25% tariffs, but Italian wine and olive oil were spared, along with European chocolate.
The size and scope of the tariffs were reduced considerably from a $25 billion list floated by Washington earlier this year that included helicopters, major aircraft components, seafood, luxury goods and other big-ticket categories that were excluded from Wednesday's announcement.
One person familiar with the case said the USTR was deliberately not using the full extent of WTO-approved retaliation to coax the EU to the negotiating table. But it came with an explicit warning. "The US has the authority to increase the tariffs at any time, or change the products affected USTR will continually re-evaluate these tariffs based on our discussions with the EU," the USTR said.
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