Font Size
Share this article


Print Friendly Version
06 October 2019
ECONOMY

Trump tariffs after WTO ruling will cost US jobs, says Airbus

While the US will impose a heftier 25 per cent rate on agricultural products and other industrial items, according to a US Trade Representative official, the high cost of commercial aircraft—which sell from about $100 million at list prices—means the aerospace industry is especially vulnerable to any effective price hike.

AIRBUS A320/BLOOMBERG


Airbus said that American jobs are at risk as President Donald Trump prepares to slap a 10 per cent tariff on its planes after the World Trade Organisation (WTO) authorised $7.5 billion in US duties against the European Union (EU), reported Bloomberg.

Guillaume Faury, the Chief Executive Officer of Airbus, said that the levies will have a negative impact on not only US airlines but also US jobs, suppliers and air travellers, adding that they’ll bring insecurity and disruption to the wider aerospace industry.

While the US will impose a heftier 25 per cent rate on agricultural products and other industrial items, according to a US Trade Representative official, the high cost of commercial aircraft—which sell from about $100 million at list prices—means the aerospace industry is especially vulnerable to any effective price hike.

According to Airbus, two-fifths of the components that make up an average Airbus jet come from the US, which faces levies alongside a host of other EU companies after the trade body found that it received illegal aid. That helps support 275,000 jobs in 40 states through spending that totalled $50 billion in the past three years, a figure it aims to double over the next decade.

Airbus has also been delivering A320 single-aisle jets from a final assembly line in Mobile, Alabama, since 2016 and added the A220 model in August.

The Mobile site separately designs cabins and cargo systems for the entire aircraft range, while a facility in Wichita, Kansas, specialises in engineering design. The Airbus CEO’s statement came before the US commented on the level of tariffs facing the company.

The WTO announcement marks the latest chapter in the body’s longest-running dispute, which also involves EU claims against Airbus rival Boeing. The feud is further testing trans-Atlantic relations that have deteriorated under Trump’s ‘America First’ strategy.

Airbus had almost 900 unfilled orders from US customers at the end of August, compared with Boeing’s EU backlog of close to 600 jets.

Airbus urged the US to take account of a looming WTO decision on a parallel case regarding the size of tariffs Europe can impose over subsidies paid to Boeing, saying they could exceed the value of the US sanctions and repeating calls for a negotiated settlement.

European Trade Commissioner Cecilia Malmstrom said in a statement that the bloc shared ‘concrete proposals’ for a new regime on aircraft subsidies and a way forward for existing compliance obligations as recently as July, but that the US has not so far reacted.

Malmstrom added that Europe will respond in kind to US countermeasures while warning that a tit-for-tat escalation will harm global trade and the aviation industry and that a ‘fair and balanced solution’ must be sought.

US carriers have also pushed back against levies, with trade group Airlines for America saying tariffs on aircraft would be ‘unprecedented’ and negatively impact both the country’s aviation industry and economy.

Boeing said Toulouse, France-based Airbus and other European businesses face tariffs because it's aerospace rival refused for years to conform with WTO rulings. The US manufacturer said it’s not too late to avoid the levies if Airbus comes into “full compliance with its obligations.”

The WTO award is lower than the Trump administration’s request to impose tariffs on $11.2 billion of European exports.

The EU has published a preliminary list of US items it plans to target in a $12 billion plan for retaliatory levies, spanning ketchup to video-game consoles. The Geneva-based WTO is expected to announce the actual sum that can be imposed sometime in the first half of next year.

The bloc could seek to hit back before then by reviving a 2002 WTO ruling allowing it to impose tariffs on more than $4 billion of US exports. The issue concerned a tax arrangement that provided American companies with an unfair advantage, though it was considered to be settled in 2006 when lawmakers repealed the measures.


RELATED STORIES: EUROPEAN UNION US PRESIDENT DONALD TRUMP TRADE TARIFFS WORLD TRADE ORGANISATION BOEING


RECOMMENDED NEWS



BRANDS MAGAZINES LATEST EDITION

OUR BRANDS



CPI Financial was established in Dubai in 1999 to meet the needs of an ever-expanding financial community, offering a comprehensive portfolio of market-leading products and services tailor-made for the banking and financial services sectors.


Subscribe to our News Letter

Subscribe

© 2019 CPI Financial. All rights reserved.

No part of this website may be reproduced or used in any form of advertising without prior permission in writing from the editor.