As expected, the World Trade Organization announced an arbitrated ruling approving $7.5-billion worth of counter-tariffs on industrial goods from the European Union and certain EU member states, a case that stems from a long dispute between Airbus and Boeing, each alleging the other benefitted from government subsidies.
Airbus jets are included in the list of products now set to be penalized by the U.S., according to the list released by the USTR, which also covers helicopters, copper alloys, dairy and meat products, and motorcycles. U.S. buyers of Airbus aircraft (including American Airlines, Delta Air Lines, and JetBlue Airways) are likely to be affected if the tariffs are imposed and upheld.
One class of products that will not be penalized are semi-finished aircraft components headed to the Airbus assembly plant in Mobile, Ala. That operation started up in 2015 and assembles four Airbus A320 aircraft each month. Semi-finished aircraft fuselages and wings shipped from France to Mobile will not be penalized, nor will aircraft wings for the Airbus A220 series fabricated in Northern Ireland. Those are expected to be delivered to Mobile too, where Airbus has started construction a new assembly line for the smaller narrow-body aircraft, formerly known as the Bombardier C-Series jets.
The Airbus acquisition of the C-Series was the subject of a separate WTO dispute not covered in the current arbitrators’ ruling.
The U.S. has offered to negotiate the issues with the European Union, but also emphasized it’s willingness to increase the amount of the tariffs or alter the products to be covered by penalties. Last month, the U.S. Trade Representative claimed the EU has not responded to invitations for a negotiated solution.
The WTO arbitrator has not yet ruled on a parallel case against the U.S. and its subsidization of Boeing. That matter will be decided in the first half of 2020, according to WTO.