On Friday February 14th, the Trump Administration sent a Valentine’s to the workers of Mobile Alabama, while sending a naughty note to the European Union and Airbus. Wait Friday evening the office of the US Trade Representative released its findings in the latest review of the tariffs placed on the European Union and Airbus in retaliation for the World Trade Organization finding that Airbus had received illegal subsidies from Europe.
In response to that ruling, the Trump Administration placed tariffs on a wide range of products from European Union countries. This included a 10% tariff on completed airplanes from Europe built by Airbus and delivered to US Airlines. That first round of tariffs did not include tariffs on airplane components or parts destined to Aibus’ only US commercial plane manufacturing facility in Mobile Alabama.
In January, The USTR announced a standard review of those tariffs and sought comment from interested parties. This is required by US government statute that the tariffs are to be reviewed 4 months after they are levied, and then every 6 months thereafter.
On Friday evening, the USTR’s office announced that they were increasing the tariff on completed airplanes from Europe from 10% to 15%, and increasing tariffs on various European agricultural products to 25%. Those agricultural products include a wide-ranging number of cheeses from France and Italy, and Irish whiskey imported from the United kingdom. This means if you like to get your cheeses from Europe, you’re going to now spend a quarter more for every dollar that you spend on those cheeses.
However, components and parts destined for the Airbus final assembly lines in Mobile Alabama were exempted again from the tariffs levied against Airbus. This means airplanes built in Mobile for US Airlines will cost Airbus 15% less to make than planes built in Europe destined for US Airlines.
in it’s press release, the US trade representative’s office said, “The United States is increasing the additional duty rate imposed on aircraft imported from the EU to 15% from 10%, effective March 18, 2020, and making certain other minor modifications.”
In a statement issued early Saturday morning, Airbus responded with the following, “Airbus deeply regrets USTR’s decision to increase tariffs on aircraft imported from the EU as well as the decision to maintain tariffs on goods from other sectors. USTR’s decision to impose tariffs further escalates trade tensions between the US and the EU, thereby creating more instability for US airlines that are already suffering from a shortage of aircraft. USTR’s decision ignores the many submissions made by US airlines, highlighting the fact that they – and the US flying public – will ultimately have to pay these tariffs. Airbus will continue its discussions with its US customers and work with them to mitigate effects of tariffs insofar as possible. Airbus has and will continue to push for a negotiated settlement to this 15-year-long dispute. USTR’s further escalation complicates efforts to find a negotiated outcome to this dispute. This is regrettable. Airbus hopes that USTR’s position will change, especially when the WTO will authorize the EU to impose tariffs on Boeing aircraft, including the 737Max, 787 and 777 aircraft in the May/June timeframe.”
Reaction from congressman Bradley Byrne’s came in quickly after the announcement on Twitter where he said, ” Great news for Alabama tonight as the @realdonaldtrump admin has exempted all components for aircraft built at Airbus Mobile from tariffs! I’ve worked hard to protect these jobs and appreciate the President for his partnership in prioritizing the interests of working Alabamians.”
These tariffs have no effect on the Airbus a220 program, which Airbus announced earlier this week they were taking a bigger ownership stake in after Bombardier chose to divest themselves of their remaining assets in the commercial aviation manufacturing industry. These tariffs are only placed on airplanes built in Europe and imported into the United States.