The US government on Monday said that it would begin collecting new duties on aircraft parts and other products from France and Germany from yesterday after failing to resolve a 16-year dispute over aircraft subsidies with the EU.
In a notice to shippers late on Monday, US Customs and Border Protection said that the duties would apply from 12:01am yesterday as part of the long-running battle over government subsidies to Europe’s Airbus SE and its US rival, Boeing Co.
The notice follows an announcement by the Office of the US Trade Representative (USTR), which said that it would impose an additional 15 percent tariff on aircraft parts, including fuselage and wing assemblies, and a 25 percent duty on certain wines.
Talks between Washington and Brussels to end the battle stalled in the final weeks of US President Donald Trump’s administration, a European source familiar with the matter said.
Washington had also pressed to reach a separate solution with Britain, which has a share in Airbus, but has exited the EU.
Brussels said that it would seek swift resolution of the issue with US president-elect Joe Biden, who takes office on Jan. 20.
The Biden team had no immediate comment on the tariff issue.
Washington and Brussels have won cases at the WTO, the former allowed to impose tariffs on US$7.5 billion of EU goods and the latter extra duties on US$4 billion of imports from the US.
Airbus said that the USTR’s expansion of tariffs to include aircraft components made in France and Germany was “counterproductive” and would wind up harming US workers at its site in Mobile, Alabama, where it assembles A320 and A220 aircraft.
The measure is to hit A320 production, which uses components from France and Germany, while the A220 production does not, an Airbus spokesman said.
Airbus delivered more than 40 planes of the A320 family from Mobile last year, but the number would be lower this year due to the COVID-19 pandemic, the spokesman said.
The initial effects might be muted since aerospace companies generally procure large components such as wings and fuselages well in advance to ensure smooth production flows.
Aircraft were covered by US tariffs, but the addition of components closed a loophole that had allowed Airbus planes assembled in Mobile to be sold in the US free of tariffs.
Unless the issue is resolved quickly, those aircraft are likely to be uncompetitive in the US market.
Some alcohol from the Airbus-producing nations — France, Germany, Spain and Britain — had been subject to tariffs, but new varieties are now affected.
The French wine exporters’ federation called it a “sledgehammer” blow.
Unlike previous short-notice tariff actions, the USTR did not grant any exclusions for products in transit or “on the water,” US Wine Trade Alliance president Ben Aneff said, calling the decision “deeply unfair.”
Aneff urged US Trade Representative Robert Lighthizer in a letter on Monday to amend the action to exempt goods in transit when the tariffs were announced less than two weeks ago on Dec. 30, noting that ocean transit can take 22 to 40 days.
Aneff said the move would hit many US businesses in the hospitality, restaurant and wine industry with sharply higher costs at a time when they are being hammered by pandemic-related closures.
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