WASHINGTON: The US government on Friday (Feb 14) said it would increase tariffs on aircraft imported from the European Union to 15% from 10%, ratcheting up pressure on Brussels in a nearly 16-year transatlantic dispute over aircraft subsidies.

The US Trade Representative’s Office said it remained open to reaching a negotiated settlement with the EU on the issue, but could revise its actions if the EU imposed tariffs of its own in connection with a pair of disputes over the subsidies.

In a statement released late on Friday, USTR said it would make minor modifications to 25% tariffs imposed on cheese, wine and other non-aircraft products from the EU, including dropping prune juice from the list. It did not raise the tariff rates on those product, as it had suggested it might do in October.

The higher aircraft tariff will take effect March 18.

The US action comes as US President Donald Trump has trained his sights on restructuring the more than US$1 tri (£767 billion) US trade relationship with the EU, raising the spectre of another major trade war as the global economy slows.

European planemaker Airbus said the US move would hit US airlines already facing a shortage of aircraft and complicate efforts to reach a negotiated settlement with the European Union in the longstanding dispute.

Airbus said it would continue discussions with US customers to “mitigate effects of tariffs insofar as possible” and hoped USTR would change its position, particularly given the threat of EU tariffs on US products in its own case before the World Trade Organisation.

“USTR’s decision ignores the many submissions made by US airlines, highlighting the fact that they – and the US flying public – ultimately have to pay these tariffs,” the company said in a statement.

The USTR had announced in December that it could increase tariff rates up to 100% and subject additional EU products to tariffs, following a decision by the WTO that EU launch aid to Airbus continued to harm the US aerospace industry.

The WTO in October had awarded Washington the right to impose tariffs on US$7.5 billion of annual EU imports in its case against Airbus. Washington then slapped 10% tariffs on most European-made Airbus jets and 25% duties on products ranging from cheese to olives and single-malt whisky, from Oct 18.

Boeing, in a statement, said it was working with US federal and state officials to “promptly bring the United States into full compliance” with WTO rulings.

“The EU and Airbus could end these tariffs by finally complying with their legal obligations, ending these illegal subsidies, and addressing their ongoing harm. We hope they will,” the company said in a statement. – Feb 15, 2020, Reuters.

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