By Todd Horwitz

U.S. to Impose Tariffs on EU Goods

The World Trade Organization (WTO) has backed a U.S. request to impose tariffs on $7.5 billion of European goods, potentially sparking a new trade war across the Atlantic.

Arbitrators from the WTO have granted President Donald Trump’s administration the right to levy billions against imports on European goods for what they say are illegal subsidies granted to plane maker Airbus by the European governments of Germany, France, Spain, and the United Kingdom. The U.S. first lodged complaints in 2004, related to the development of the Airbus A350 and A380 airplanes, the WTO said in a summary of its findings.

The trade body rejected some claims made by the U.S. but did find that Airbus had “paid a lower interest rate for the A350XWB LA/MSF than would have been available to it on the market.” It also found that the European Union had failed “to take appropriate steps to remove the adverse effects or … withdraw the subsidy,” which had led to a “genuine and substantial” cause of serious prejudice to the United States’ interests.

The WTO ruling added that the United States had suffered significant lost sales in the twin-aisle and very large aircraft markets. Washington previously said it wanted to impose tariffs of up to 100% on European exports to the U.S., with an annual trade value of around $11.2 billion a year.

Washington has requested the WTO meet Oct. 14 to formally authorize the tariffs, and the duties would then take effect Oct. 18, according to USTR. The goal of the Trump administration in imposing retaliatory duties is to persuade the European Union to reach a negotiated settlement, according to a senior U.S. trade official who briefed reporters on Wednesday.

“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,” U.S. 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.”

The ruling Wednesday is a milestone in the WTO’s longest-running dispute that will further test transatlantic relations, which have deteriorated under Trump’s “America First” approach to international ties. It’s also an example of Trump getting a favorable ruling from an organization he has threatened to pull out of.

Todd “Bubba” Horwitz