The Horizon Sun

America Prepares Tariffs Against European Union, Citing Illegal Subsidies

Erika Sonnemann-Creed, Editor of Features and Extras

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A major trade dispute between the United States (US) and European Union (EU) has reached its boiling point, as both countries prepare to roll out tariffs and duties on the other’s goods. On April 8, 2019, the Office of the United States Trade Representative released a statement about EU tariffs, declaring that they would soon be taxing a multitude of European goods including Airbus planes, the components used to make them, and other EU exports, primarily food and clothing.

The trade conflict has its roots in another, separate dispute from 2004. Airbus, a major rival of the American company Boeing, was found to have been receiving government subsidies which in turn harmed US business in Europe. The World Trade Organization (WTO), which reviewed the case, determined that some of the subsidies which were used in production of new airplane models were illegal in nature and provided an unfair advantage over foreign business, according to The New York Times. Despite this, the European Union has not ceased giving subsidies to the company, causing the American government to retaliate.

However, American demands for the EU to stop subsidizing Airbus are, at their core, hypocritical. For the WTO has also stated that the US has been giving illegal subsidies to Boeing at the same time. In summary, both sides are giving their respective companies extra money, which gives them an unfair advantage in their home markets.

In response to this supposed trade inequality, US Trade Representative Robert Lighthizer has stated they are considering levying approximately $11.2 billion USD worth of tariffs, equal to their calculations on the amount of money lost to EU subsidies annually. According to CNN Business, Lighthizer wishes “…to reach an agreement with the EU to end all WTO-inconsistent subsidies to large civil aircraft.”

The European response to the new tariffs has been overwhelmingly negative. Airbus called the tariffs “totally unjustified,” and threatened action against the US. The European Commission, one of the primary institutions of the European Union, has stated that while they are currently waiting on the WTO to issue a ruling on the American subsidies to Boeing, they are ready to counter with their own tariffs on American goods entering Europe.

This is not the first round of tariffs between the two competing powers. Prior to this, the Trump administration ordered an increase in taxes on European steel and aluminum last May, which has yet to be resolved. However, with the confrontational attitude of the US government towards trade issues like these, this will most certainly not be the last dispute, either.

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America Prepares Tariffs Against European Union, Citing Illegal Subsidies