Shortly before leaving office, the administration of US President Donald Trump has reignited the trade dispute with the EU – the punitive tariffs imposed by the US government in October 2919 are even set to increase on French and German products. The background to the dispute is a long-running dispute over subsidies for Airbus and Boeing, with the US and Europe imposing punitive tariffs on each other. Now French cognac and German wine will also be hit.
USA (Washington) – In the dispute over subsidies for aircraft manufacturers Airbus and Boeing, Washington announced new punitive tariffs on French and German products shortly before the turn of the year (Wednesday 30 December 2020). According to the US Trade Commission (USTR), the tariffs will affect “aircraft components from France and Germany, certain wines, and cognacs and other spirits from France and Germany”.
The US had received the green light from the WTO in 2019 for $7.5 billion worth of surcharges on imports over improper EU subsidies to Airbus. The US 25 per cent tariffs, imposed in October 2019, have so far targeted products such as wine, cheese and olive oil, in addition to Airbus aircraft. Now, just before the end of the year and the end of the Trump administration, they have been extended.
The USTR attributes the extension of the tariffs to the fact that “the European Union based its decision on the counter tariffs on the trade volume of the EU states without Great Britain. This unfairly increased the punitive tariffs for the US.”
As at the beginning of the trade dispute, the EU now again “regrets” the new punitive tariffs against products from Germany and France. The government in Washington had “unilaterally” interrupted ongoing talks with its action, the EU Commission said a day later on Thursday (31 December 2020) in Brussels. At the same time, it expressed the hope that the dispute with the administration of future US President Joe Biden could be settled.
Airbus criticised the tariffs as “counterproductive”, also for the US industry, which the Trump administration does not want to know about. The tariffs in the first place testify to a will to “escalate the conflict, to which Europe must respond “appropriately”, the European aircraft manufacturer announced on the same day.
FEVS is stunned
The Federation of French Wine and Spirits Exporters (FEVS) expressed its “anger” and “bewilderment”. The French wine and spirits industry is being “sacrificed for a dispute of the aviation industry”, criticised association president César Giron.
“The USA was by far the most important foreign market for the French wine industry until the imposition of the special tariffs,” said Giron. Before the imposition of the US tariffs, the turnover there was 3.7 billion euros, which was a plus of 16 percent compared to the previous year. Other important markets for French wine and spirits producers are China, Great Britain, Singapore and Germany. In Germany, sales of French wines amounted to around 902 million euros as of the 2019 reporting year. This was an increase of 2.6 per cent on the previous year.