Clothing will be affected by the new tariffs imposed on EU imports

Clothing will be affected by the new tariffs imposed on EU imports

The US has been given the green light to impose tariffs ranging from 10% to 25% on US$7.5bn worth of goods it imports from the EU, including clothing.

The ruling was made by the World Trade Organization (WTO) yesterday (3 October) and means duties on EU goods including sweaters and some outdoor wear will apply from 18 October. The bulk of tariffs are applied to imports from France, Germany, Spain and the UK.

The move comes as part of an escalating trade row over aircraft subsidies. In May 2018, the WTO issued an appellate report finding that European Union (EU) subsidies to high-value, twin-aisle Airbus aircraft have caused serious harm to US interests. The report found that billions of dollars in launch aid to the A350 XWB and A380 caused significant lost sales to Boeing 787 and 747 aircraft, as well as lost market share.

Based on that decision, the US requested authority to impose countermeasures worth $11.2bn per year. The EU challenged that figure – with the final decision coming from the WTO yesterday.

The full list of affected products issued by the office of US Trade Representative (USTR) includes sweaters, pullovers, sweatshirts and similar items that are knitted, crocheted or of wool or cotton, women's and girls anoraks, swimwear and men's or boys suits of wool or artificial fibres.

In a statement announcing the news,  US trade representative Robert Lighthizer said: "For years, Europe has been providing massive subsidies to Airbus that have seriously injured the US aerospace industry and our workers. Finally, after 15 years of litigation, the WTO has confirmed that the United States is entitled to impose countermeasures in response to the EU's illegal subsidies. Accordingly, the United States will begin applying WTO-approved tariffs on certain EU goods beginning on October 18. We expect to enter into negotiations with the European Union aimed at resolving this issue in a way that will benefit American workers." 

The USTR added it will continually re-evaluate the tariffs based on its discussions with the EU.

The EU Commission has also identified $20bn worth of US imports on which it could impose an additional tariff. That decision from the WTO is expected in early 2020.

Commenting on the WTO's ruling on the Airbus dispute, EU commissioner for trade, Cecelia Malstrom, said: "We remain of the view that even if the United States obtains authorisation from the WTO Dispute Settlement Body, opting for applying countermeasures now would be short-sighted and counterproductive. Both the EU and the US have been found at fault by the WTO dispute settlement system for continuing to provide certain unlawful subsidies to their aircraft manufacturers.

"In the parallel Boeing case, the EU will in some months equally be granted rights to impose countermeasures against the US as a result of its continued failure to comply with WTO rules. A preliminary list of US products to be considered for countermeasures was published last April. The mutual imposition of countermeasures, however, would only inflict damage on businesses and citizens on both sides of the Atlantic, and harm global trade and the broader aviation industry at a sensitive time.

"The European Commission has consistently communicated to the United States that the European Union is ready to work with them on a fair and balanced solution for our respective aircraft industries...Our readiness to find a fair settlement remains unchanged. But if the US decides to impose WTO authorised countermeasures, it will be pushing the EU into a situation where we will have no other option than do the same."