Transatlantic Trade Update: The U.S. to Impose Punitive Duties on The European Union

By Mollie Bailey and Linda Bravo

While recent news headlines have been dominated by the ongoing trade discussions between the U.S. and China, a new ruling from arbitrators at the World Trade Organization (WTO) may have flown under the radar. This ruling is sparking a new conflict between the U.S. and the EU on the Transatlantic trade bloc. On October 2^nd, the United States Trade Representative (USTR) announced, “The U.S. has won the largest arbitration award in WTO history [which originally surfaced in 2004] in its dispute with the EU over illegal subsidies to Airbus.”

According to Fortune, the ruling “found that the European bloc and member states Britain, France, Germany and Spain failed to remove improper financial subsidies for Airbus that hindered sales by U.S. rival Boeing.” So, what are the outcomes of the ruling, and what should shippers and carriers know about how it may affect them?

What Does This Ruling Mean for U.S. Tariffs on EU Products?

As an outcome of the decision, the U.S. is now able to legally impose custom tariffs on EU products, up to $7.5 billion each year until the EU is compliant with the illegal subsidies. These tariffs are called Section 301 Duties, and are the same Section 301 Duties being used to assess tariffs against China for various trade retaliation measures. Following are the products impacted by the new EU Section 301 ruling.

These products are subject to a 10% duty rate increase:

Section 1: New airplanes or other aircrafts from France, Germany, Spain or the United Kingdom

These products are subject to a 25% duty rate increase:

Section 2: Scotch whiskeys, sweaters, wool suits, pajamas, swimwear and bed linen from the United Kingdom
Section 3: Coffee, axes, metal tweezers, objective lenses and parts and laboratory microwave ovens from Germany
Section 4: Sweet biscuits, waffles, books, brochures, electromechanical tools and self-propelled machinery from Germany or the United Kingdom
Section 5: Frozen meats, whey protein, fresh cheese, olive oil, and olives from Germany, Spain or the United Kingdom
Section 6: Liqueurs and cordials from Germany, Ireland, Italy, Spain or the United Kingdom
Section 7: Olives, pitted or stuffed and wine other than Tokay from Germany, Spain or the United Kingdom
Section 8: Cheeses and substitutes for cheese from Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, Germany, Greece, Hungary, Ireland, Italy, Latvia, Luxembourg, Malta, Netherlands, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden or the United Kingdom
Section 9: Swiss or Emmental cheese with eye formation from Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden or the United Kingdom
Section 10: Pork other than ham and shoulder and cuts thereof, not containing cereals or vegetables, boned and cooked and packed in airtight containers from Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Finland, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden or the United Kingdom
Section 11: Pecorino cheese from sheep’s milk in original loaves, not suitable for grating from Austria, Belgium, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden or the United Kingdom
Section 12: Yogurt, butter, processed cheese, fruited, pork sausages, cherries, peaches and juices from Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden or the United Kingdom
Section 13: Butter substitute dairy spreads, dairy spreads, processed cheese and prepared or preserved pork hams from Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden or the United Kingdom
Section 14: Fats and oils, cheeses, mussels, berry fruit jellies, pares and pear juices and prune juices from Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden or the United Kingdom
Section 15: Yogurt, fermented milk, butter, cheeses, oranges, mandarins, clementines, lemons, cherries, pork, mussels and clams from Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden or the United Kingdom

What’s Next for the Transatlantic Trade Situation?

The new tariffs came into effect on Friday, October 18^th, 2019, and will stay in place indefinitely or until the EU comes into full compliance with the WTO’s ruling. In addition, a decision from the WTO on whether the EU is allowed to impose tariffs on U.S. exports in a similar dispute over subsidies to Boeing is expected to be made in 2020. This could further intensify the trade situation, and impact those shipping goods to and from countries in the EU.

As the international trade landscape continues to evolve, it’s important to stay up-to-date on the latest happenings within the industry and understand how changes may affect your operations.

Mollie Bailey, Vice President of International, Transplace, has more than 20 years of international transportation experience. She is responsible for operations and regulatory compliance for Transplace’s ocean and air forwarding business.