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August 13, 2020

US refrains from raising EU, UK tariffs – but tweaks targets

The US has held back from increasing its tariffs on EU and UK goods – including on a range of foods – but has made changes to the list of items on which the levy is imposed.

By Dean Best

The US has held back from increasing the US$7.5bn of tariffs on EU and UK goods – including on a range of foods – imposed last year in a dispute over subsidies for European aerospace giant Airbus.

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However, Washington has made changes to the list of goods on which the tariff is levied, tweaks that have benefited some food makers but penalised others.

In October, The World Trade Organization gave the US the green light to levy a 25% tax on imports of food, beverages and other goods as part of Washington’s long-running complaint over European subsidies to plane maker Airbus. Butter, yogurt, fruit, meat and seafood were among the foods taxed.

The US administration said at the time the tariffs were designed to allow the country to claw back some of the losses Airbus’ American competitor Boeing has accrued.

In June, US officials threatened to raise the tariffs rates or make new items subject to the levy.

Yesterday (13 August), Washington announced changes to the list of goods hit with the tariff, pulling from the list sweet biscuits made in the UK and adding jam from France and Germany.

“The EU and member states have not taken the actions necessary to come into compliance with WTO decisions,” US Trade Representative Robert Lighthizer insisted. “The United States, however, is committed to obtaining a long-term resolution to this dispute. Accordingly, the United States will begin a new process with the EU in an effort to reach an agreement that will remedy the conduct that harmed the US aviation industry and workers and will ensure a level playing field for U.S. companies. ”  

The changes to the list of goods facing the levy will take effect on 1 September. The US said it had removed from the tariff list “certain products from Greece and the United Kingdom and adding an equivalent amount of trade from France and Germany”.

Last autumn, announcing the tariffs, Washington said the levy was set to hit US$7.5bn worth of imports, with the “bulk” applied to goods coming from France, Germany, Spain and the UK. The US said the four countries were “responsible for the illegal subsidies”.

In 2004, the US brought a WTO challenge to EU subsidies, after failed attempts to convince the EU, as well as France, Germany, Spain and the UK, to cease their subsidisation of Airbus.

In 2011, the WTO found that the EU provided Airbus with $18bn in subsidised financing from 1968 to 2006. It also found that European “launch aid” subsidies were vital in allowing Airbus to launch every model of its large civil aircraft; this then made Boeing lose sales of more than 300 aircraft and market share throughout the world, the US claims.

However, the WTO had also, at times, censured the US for support for Boeing.

In response to Washington’s latest announcement on the tariffs, Liz Truss, the UK’s International Trade Secretary, said: “In Washington D.C. last week, I met my opposite number Bob Lighthizer, the US Trade Representative, to warn against new tariffs being imposed on great British products like gin and blended whisky. I am pleased that the US has not applied these additional tariffs, and welcome the decision to lift tariffs on shortbread.

“However, the announcement does not address tariffs that already exist on goods like single malt Scotch whisky. These tariffs damage industry and livelihoods on both sides of the Atlantic and are in nobody’s interests. I am therefore stepping up talks with the US to remove them as soon as possible.”

Related Companies

Free Whitepaper
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What is the impact of historically high inflation on the UK consumer landscape?

The average UK consumer is experiencing a severe cost-of living crisis as inflation surges to a forty-year high and the price of goods continues to rise. This shock is the result of the sharply increasing costs of commodities, energy, and the ongoing conflict in Ukraine, and is threatening FMCG manufacturers, retailers, and foodservice operators’ ability to survive and grow. Inflation will have a profound effect on many consumer-facing industries in 2022 and beyond. Consult GlobalData’s new whitepaper, Inflation in the UK: The Impact of Historically High Inflation on the UK Consumer Landscape, to better understand shifts in consumer behavior and their impact on spending patterns, as well as the implications for UK businesses. This whitepaper covers:  
  • Why has global inflation returned with a vengeance?
  • What is the current inflation situation in the UK?
  • What impact is inflation having on UK retail sales?
  • What tactics are businesses relying on to tackle the effects of high inflation?
  • How are consumers changing their behaviors to cope with the higher cost of living?
  • Which industry sectors are most vulnerable to reduced consumer demand?
  • How is the government responding to high inflation?
  • How long will high inflation last in the UK?
  • How can your company survive and thrive in a high inflation environment?
Enter your details here to receive your free whitepaper and ready your business for these increasingly uncertain times.
by GD50 Custom
Enter your details here to receive your free Whitepaper.

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