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U.S. and Europe Escalate Trade Fight

WASHINGTON — The United States and the European Union are preparing to levy tit-for-tat tariffs on each other’s products as part of a long-running dispute over the aerospace industry, the latest escalation in a 14-year fight over government aid given to Boeing and European rival Airbus.

“The World Trade Organization finds that the European Union subsidies to Airbus has adversely impacted the United States, which will now put Tariffs on $11 Billion of EU products!” President Trump said in a tweet on Tuesday morning. “The EU has taken advantage of the U.S. on trade for many years. It will soon stop!”

The United States Trade Representative said Monday night that it was preparing a list of European products to tax in response to European subsidies given to Airbus. That prompted the European Union to announce that it was also readying a list of tariffs to counter American subsidies to Boeing.

The move comes amid tense trade relations between the United States and Europe, which are engaged in tit-for-tat tariffs related to Mr. Trump’s decision last year to impose them on European steel and aluminum. Mr. Trump has also threatened to impose tariffs on European cars and car parts if the European Union does not agree to better trade terms for American products.

The announcement on Monday stems from a separate dispute that began in 2004 related to government subsidies that Europe provides to Airbus, which is a rival to America’s Boeing.

Last May, the World Trade Organization found that Airbus had received illegal funding for several of its models. The United States requested the authority to impose retaliatory tariffs of $11.2 billion per year, and the two sides are awaiting a decision on the level of tariffs that America will be authorized to levy on the European Union.

In preparation for that decision, which is expected this summer, the United States announced Monday night that it was beginning to identify a list of European products to tax, so it could impose the duties as soon as the organization makes a ruling. The initial list of American levies would cover $11 billion of trade in products including airplanes, cheese, fish, wine, clothing, nails, pipes and clocks — the same dollar amount of harm that the United States Trade Representative estimates European subsidies cause each year.

“This case has been in litigation for 14 years, and the time has come for action,” Robert Lighthizer, the United States Trade Representative, said in a statement.

“Our ultimate goal is to reach an agreement with the E.U. to end all W.T.O.-inconsistent subsidies to large civil aircraft,” Mr. Lighthizer said. “When the E.U. ends these harmful subsidies, the additional U.S. duties imposed in response can be lifted.”

In a statement, Airbus called the American tariff announcement “totally unjustified” and said that the European Union would take “far larger countermeasures against the U.S.”

In a press briefing, the European Commission said that the World Trade Organization was also preparing to rule on a parallel dispute that the Europeans had brought against American subsidies to Boeing.

“The commission is starting preparations so that the European Union can promptly take action based on the arbitrator’s decision on retaliation rights in this case,” a spokesman said.

The announcements are an escalation in tensions between the United States and the European Union, which have squabbled over trade barriers to each others’ products and the tariffs that Mr. Trump has levied on the bloc. The United States imposed tariffs on steel and aluminum from the European Union last May as part of a global measure to protect the metals industry, and Mr. Trump has frequently threatened to tax European cars coming into the United States as well.

The two governments announced plans in July to negotiate an agreement that would reduce tariffs and other barriers to trade on both sides of the Atlantic, but have since disputed exactly what would be included in the agreement.

In its statement Monday, the Trump administration emphasized that its latest measures against the European Union would comply with the rules of the World Trade Organization.

Trade experts described the move as significant but not surprising.

Jennifer Hillman, a professor at Georgetown Law, said it appeared to be compliant with World Trade Organization rules, as long as the United States waited for the final World Trade Organization decision before imposing its tariffs. “If U.S.T.R. wants to impose the tariffs as soon as the arbitration amount is announced, they need to start the public process now so as to be ready with a specific list of products as soon as arbitrator says the amount.”

Experts also suggested the organization was likely to decide in the United States’ favor over the Airbus subsidies.

“The W.T.O. dispute settlement body will likely authorize the United States to impose retaliatory tariffs in the magnitude we’re asking for or close to it,” said Matthew Gold, an adjunct professor of Law at Fordham University.

Both foreign officials and many trade lawyers have argued that Mr. Trump’s other trade measures, including the metals tariffs and prospective auto tariffs, which the Trump administration says it has made on the basis of national security, are likely to violate the organization’s rules.

Source: NYT

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