ANALYSIS: USTR maintain tariffs on EU aircraft at 15%, tweaks components of other tariffs

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  Recap: The USTR made only ‘modest’ changes to the tariff list in response to Airbus (opened lower by ~2.8% this morning) subsidies as the 15% tariff rate on aircraft and 25% for other products was maintained. Changes saw the removal of certain products from UK and Greece from the tariff list and adding an equal amount of trade from France and Germany effective September 1st. In terms of accompanying remarks, USTR Lighthizer said the EU & member states have ‘not taken the actions necessary to come into compliance with WTO decisions’. However, does remain committed to a resolution and as such will commence a new process with the EU to attain an agreement. Link to USTR Release
  


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  EU Response: EU Trade Commissioner Hogan said the US refraining from increasing tariffs on EU goods avoided exacerbating the issue and they will continue to engage with the USTR to negotiate a solution for ongoing trade irritants. In reaction to tariffs being maintained, an Airbus spokesperson said they regret the maintaining of tariffs, given their actions to achieve full compliance, and as such trusts that Europe will respond appropriately to defend the interests of those targeted by the tariffs. As such, focus will be on any indication towards retaliatory action as in-spite of the comments from Hogan, the EU has previously said they are prepared to take further action; it may prove pertinent to look for a reply from Germany/France given tariffs were rotated to them and Le Maire previously said the EU is prepared to enact tariffs. Note, the EU are still awaiting a verdict from the WTO regarding the scale of tariffs they can implement on the US in relation to American subsidies for Boeing – a matter the US says they resolved in May.


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  UK Response: UK Trade Secretary Truss welcomed the fact that no additional tariffs were applied but said they are to step up discussions with the US aimed at removing tariffs on UK goods including whisky; largely a reiteration of Truss’s existing stance that the tariffs are unacceptable and seeks their immediate removal. On the trade front, prior to the USTR update, the UK remarked that positive progress continues to be made within trade discussions with the US and negotiations are to continue at pace throughout Autumn. Within these discussions views are mixed on whether the import tariffs will be removed at year-end when the Brexit transition period ends or if they will continue to be implemented and as such will become an increasingly important area within UK-UK trade talks.

13 Aug 2020 - 08:25- Research Sheet- Source: Newsquawk