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Wednesday, April 14, 2021

US, Europe agree to suspend tariffs from Trump’s trade war

President Joe Biden and Ursula von der Leyen, the president of the European Commission, agreed in a phone call on Friday to suspend all tariffs imposed in the dispute over subsidies given to Boeing and Airbus.

By: New York Times |
March 6, 2021 10:30:56 am
An Airbus A330 is assembled in Blagnac, France, July 7, 2014. The United States and European Union agreed to temporarily suspend tariffs on billions of dollars of products as they search for a settlement to a long-running clash over subsidies given to Airbus and Boeing. (Ulrich Lebeuf/The New York Times)

Written by Ana Swanson

The United States and European Union agreed to temporarily suspend tariffs levied on billions of dollars of each others’ aircraft, wine, food and other products as both sides try to find a negotiated settlement to a long-running dispute over the two leading airplane manufacturers.

President Joe Biden and Ursula von der Leyen, the president of the European Commission, agreed in a phone call on Friday to suspend all tariffs imposed in the dispute over subsidies given to Boeing and Airbus for “an initial period of four months,” von der Leyen said in a statement.

“This is excellent news for businesses and industries on both sides of the Atlantic, and a very positive signal for our economic cooperation in the years to come,” she said.

In a statement, the White House said Biden had “underscored his support for the European Union and his commitment to repair and revitalize the U.S.-EU partnership.”

The World Trade Organization had authorized both the United States and Europe to impose tariffs on each other as part of two parallel disputes, which began almost two decades ago, over subsidies the governments have given to Airbus and Boeing. The EU had imposed tariffs on roughly $4 billion of American products, while the United States levied tariffs on $7.5 billion of European goods.

The aircraft dispute is an early test of the Biden administration’s ability to rebuild America’s relationship with Europe, which U.S. officials see as crucial for accomplishing other trade and foreign policy goals.

President Donald Trump took a more adversarial and aggressive stance toward the bloc, accusing it of cheating the United States on trade and imposing tariffs on European metals, aircraft and other products. He also threatened further tariffs against European automakers.

The Biden administration has said it would restore ties with a formerly a close ally, as it seeks to form coalitions to take on bigger global problems, like China’s unfair trade practices. And it has committed to pressing Europe for a settlement on the aircraft dispute, as well as other continuing trade spats over metals, digital service taxes and other issues.

“Finally, we are emerging from the trade war between the United States and Europe, which created only losers,” Bruno Le Maire, the French finance minister, said on Twitter. He added that a burden would be lifted for French winegrowers, whose sales have been pummeled by steep retaliatory tariffs that the Trump administration imposed on imports to the United States.

In a joint statement with the European Union, the Office of the U.S. Trade Representative said the suspension would take effect “as soon as the internal procedures on both sides are completed” and that the agreement signaled “the determination of both sides to embark on a fresh start in the relationship.”

It said that both sides were committed to reaching a comprehensive solution to the disputes, which would include rules on future aircraft subsidies, monitoring and enforcement, and efforts to address “the trade distortive practices of and challenges posed by new entrants to the sector from nonmarket economies, such as China.”

The Distilled Spirits Council, a trade group representing the liquor industry, called the decision a “a promising breakthrough in the long-standing trade dispute on civil aircraft subsidies, which has left much destruction to the spirits sector in its wake.”

The deal would suspend a 25% tariff imposed by Europe on American rum, brandy and vodka, as well as a 25% tariff the United States imposed on liqueurs and cordials from Germany, Ireland, Italy and Spain, and cognacs and other grape brandies from France and Germany.

On Thursday, the United States said it would temporarily suspend tariffs levied against the United Kingdom, including on Scotch whisky, as part of the dispute for a period of four months.

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