The WTO decision followed a similar award made last year in favor of the United States, which resulted in the Trump administration imposing tariffs on European goods including civil aircraft, Parmesan cheese, French wine and Scotch and Irish whiskies. European officials made clear on Monday they would prefer for both sides to drop the measures.
Tariffs act as a tax on exports, and are either absorbed by producers in the form of reduced profits, or passed on to consumers in higher prices.
“We have made clear at every stage that we want to settle this long running issue,” executive vice president of the European Commission Valdis Dombrovskis told journalists at a press conference. “Regrettably, due to lack of progress with the US, we had no other choice but to impose these countermeasures,” he added.
Will Biden boost transatlantic trade?
The EU decision to move ahead with tariffs is not expected to escalate the transatlantic trade tensions that flared up under US President Donald Trump. That’s because the tariffs were expected, and President-elect Joe Biden is likely to take a more conciliatory approach to America’s relationship with allies such as Europe.
“We would not be surprised if the US and the EU defuse or even settle [the Airbus-Boeing] dispute shortly after the Biden administration takes office on 20 January 2021,” Holger Schmieding, the chief economist at Berenberg, said in a research note on Monday. In a report published last week, Schmieding said that under Biden the two sides may even look to do a free trade deal.
This could be a “somewhat skinny version of the Transatlantic Trade and Investment Partnership which the EU and US had discussed until Trump pulled out of the negotiations right after taking office in 2017,” he explained.
A “helpful start” to finding a new balance in the trading relationship would be “ending the Airbus-Boeing dispute and eliminating tariffs on industrial goods,” he added.
European Commission President Ursula von der Leyen appealed to the historic ties between the European Union and the United States in a statement on Saturday in which she congratulated Biden on his victory and called for a “renewed partnership.”
“The European Union and the United States are friends and allies,” she said, adding that the European Commission “stands ready to intensify cooperation with the new administration,” including on issues such as the pandemic and climate change.
In line with this shift, “Biden may also pursue trade policies more focused on protecting existing jobs at home than on opening up new opportunities through freer trade,” according to Schmieding.
“Trade liberalization [in the United States] is largely off the agenda for now,” said managing director of Eurasia Group’s US practice Jon Lieber in a briefing last week. “Trade enforcement could certainly be a thing that you see a lot more of coming out of the US,” he added.
— James Frater contributed reporting.