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Tariff Hike on $11 Billion in Imports from EU Could Come This Summer

Wednesday, April 10, 2019
Sandler, Travis & Rosenberg Trade Report

Hundreds of goods imported from the European Union are on a preliminary list of products that could be subject to additional tariffs as early as this summer in a long-running dispute over aircraft subsidies. Importers of goods on this list should consider taking proactive measures to mitigate the impact of any potential tariff increase, such as working to have their products omitted from the final list or considering alternative sourcing locations.

The Office of the U.S. Trade Representative states that after more than a decade of litigation the World Trade Organization’s Appellate Body ruled in May 2018 that the EU had failed to fully withdraw subsidized financing to Airbus previously found to be inconsistent with WTO rules and harmful to U.S. interests. Based on that decision the U.S. requested authority to impose countermeasures worth $11.2 billion per year. The EU challenged that figure and a final decision from a WTO arbitrator is expected this summer.

To enable the U.S. to “respond immediately” when that decision is announced, USTR is beginning the process of identifying EU products to which additional tariffs of up to 100 percent may be applied. The preliminary list includes 317 tariff lines when imported from any of the 28 EU member states as well as nine tariff lines covering helicopters, aircraft, and aircraft parts when imported from France, Germany, Spain, or the United Kingdom.

The estimated import value of the goods on the preliminary list was approximately $21 billion in 2018. However, the final list will reflect only the amount of trade found to be adversely affected in the arbitrator’s decision. USTR states that retaliatory tariffs imposed on goods included in the final list will only be lifted “when the EU ends these harmful subsidies.”

USTR is inviting public input on any aspect of the proposed retaliation, including (1) which products should retained, removed, or added; (2) the level of tariff increase, if any; (3) the appropriate aggregate level of trade to be covered by additional tariffs; and (4) whether increased tariffs on particular products might have an adverse effect on U.S. stakeholders, including small businesses and consumers.

Comments on these issues are due by May 28. USTR is also holding a hearing May 15 in Washington, D.C., and requests to appear at this hearing are due by May 6.

For more information on the preliminary list or assistance participating in this proceeding, please contact Kristen Smith at (202) 730-4965.

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