US slaps fresh tariffs on French, German wine, liquor and aircraft parts

The United States has announced that it will impose additional tariffs on French and German products as part of a long-running dispute over subsidies for aircraft manufacturers Airbus and Boeing.

The tariffs are on "aircraft manufacturing parts from France and Germany, certain non-sparkling wine from France and Germany, and certain cognac and other grape brandies from France and Germany," which will be added to the list of products taxed since 2019, according to a statement from the US Trade Representative (USTR).

The tariffs come as US and European negotiators continue talks on ending a long-running dispute over aid to Europe's Airbus SE, which is politically backed by Britain, France, Germany and Spain, and US aid to planemaker Boeing Co.

The USTR said on Wednesday the EU had unfairly calculated tariffs against the United States allowed by a September World Trade Organization ruling in the ongoing dispute: "The EU needs to take some measure to compensate for this unfairness."

The decision is the latest twist in the 16-year trade battle over aircraft subsidies that turned increasingly sour under the protectionist instincts of US President Donald Trump and comes despite hopes for a trade truce following Joe Biden's election.

READ MORE: US increasing tariffs on Airbus planes to 15 percent from 10 percent

Washington points fingers

The EU was authorised this year by the WTO to levy additional customs duties on American products.

But Washington believes it has been penalised by the method of calculation chosen, which, according to the Trump administration, has led to an excessive amount of customs duties levied on American products.

"In implementing its tariffs... the EU used trade data from a period in which trade volumes had been drastically reduced due to the horrific effects on the global economy from the Covid-19 virus," the USTR statement said.

"The result of this choice was that Europe imposed tariffs on substantially more products than would have been covered if it had utilised a normal period. Although the United States explained to the EU the distortive effect of its selected time period, the EU refused to change its approach," the statement said.

As a result the US "is forced to change its reference period to the same period used by the European Union," it continued.

The US also deplored an EU decision to exclude the UK from its calculations, which it argued unfairly increased the tariffs.

The feud over European aircraft manufacturer Airbus and its American competitor Boeing is the longest and most complicated ever handled by the WTO.

The aviation feud predates Trump, but Washington quickly embraced the opportunity to impose $7.5 billion in tariffs against Europeans after also being cleared to do so by the WTO last year.

Food and beverage sector in distress

Washington imposed punitive tariffs of 25 percent on iconic EU products such as wine, cheese and olive oil and put a 15 percent tariff on Airbus planes in March.

In retaliation, the EU has been imposing customs duties on $4 billion of American exports since the beginning of November.

Ben Aneff, president of the US Wine Trade Alliance, said the action would cause further hardship for US companies already hit hard by previous tariffs, and urged President-elect Biden to quickly reverse course.

"This action is a body blow for American companies. US restaurants and small businesses are already struggling to survive; this decision will only destroy more jobs and shutter more doors," said Aneff, managing partner of Tribeca Wine Merchants in New York City.

Emily Haber, Germany's ambassador to the United States, this month urged quick action to resolve the dispute, calling it a distraction from bigger issues that require joint action such as climate change and the pandemic. 

READ MORE: Trump wants to impose new tariffs on EU