Background

The U.S. is expanding the list of European Union goods subject to additional tariffs in a long-running aircraft subsidy dispute. These tariffs will remain at 25 percent for non-aircraft products and 15 percent for certain large civil aircraft.

Effective for goods entered or withdrawn from warehouse for consumption on or after 12:01 am EST on Jan. 12, the U.S. will add the following products of France and Germany to this list.

- non-sparkling wine in HTSUS 2204.21.20, 2204.21.30, 2204.21.60, 2204.21.80, 2204.22.20, 2204.22.40, 2204.22.60, 2204.22.80, 2204.29.61, 2204.29.81, and 2204.30.00

- cognac and other grape brandies in HTSUS 2208.20.40 (partial)

- aircraft manufacturing parts in HTSUS 8803.30.00 (partial)

In October 2019 the U.S. imposed additional tariffs on more than 150 goods imported from EU countries as well as new aircraft from France, Germany, Spain, and the United Kingdom. This action followed a determination by a World Trade Organization arbitrator that the U.S. may impose up to $7.5 billion annually in countermeasures against the EU due to its failure to fully comply with a previous WTO ruling against subsidies it provided to aircraft manufacturer Airbus. Similarly, the EU won WTO authorization to impose tariffs against $4 billion worth of U.S. goods following a ruling against U.S. aircraft production support measures to Boeing.

However, the Office of the U.S. Trade Representative claims that in implementing its tariffs the EU used trade data from a period in which trade volumes had been drastically reduced due to the economic effects of the COVID-19 pandemic. As a result, the EU imposed tariffs on “substantially more products than would have been covered if it had utilized a normal period.” In addition, USTR said, the EU calculated the amount of trade to be covered using EU-27 trade volume (i.e., excluding UK trade), which unfairly increased the EU’s retaliation for the 52 days in which the UK remained within the EU for tariff purposes.

USTR cites these actions as the reason it is making the above adjustments to U.S. tariffs. However, USTR notes that “to not escalate the situation” these adjustment represent “less than the full amount that would be justified utilizing the EU’s chosen time period.”

For more information on these tariffs and how to mitigate their impact, please contact Nicole Bivens Collinson or Kristen Smith.

Copyright © 2021 Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc. All rights reserved.

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