The WTO ruled in favor of the US regarding a 15-yr-old dispute over French subsidies of Airbus that directly harmed The Boeing Company, to the tune of $7.5 billion. The ruling allows the US to impose those $7.5 billion as tariffs, and the Office of the US Trade Representative says that we’ll apply
a 10% tariff on aircraft imported from Europe and apply a 25% import tax on other agricultural and industrial items on October 18….
France says they’ll respond with retaliatory tariffs if we go through with this. French Finance Minister Bruno Le Maire:
If the American administration rejects the hand that has been held out by France and the European Union, we are preparing ourselves to react with sanctions[.]
EU Trade Commissioner Cecilia Malmstrom agrees with Le Maire:
If the US decides to impose WTO authorized countermeasures, it will be pushing the EU into a situation where we will have no other option than do the same[.]
Couple things about that. One is that the US has already proposed both no-tariff-at-all and no-tariffs-on-autos trade régimes, but the EU has refused to discuss either, despite then-European Commission President Jean-Claude Juncker’s promise to take the matters up.
The other thing is that, under WTO rules, it’s illegal to apply retaliatory tariffs in response to tariffs applied pursuant to a WTO judgment. The French and EU threats regarding the WTO-permitted tariffs on the Airbus affair clearly demonstrate EU (and French) bad faith by themselves. Coupled, though, with the Eu’s refusal to discuss the no-tariff offers already on the table, it’s clear that the EU has no intention at all in dealing honestly with us on trade.
Our own effort at good-faith negotiation is just as clear:
The WTO had approved up to 100% tariffs, but the US decided to limit the tax.