Timing of EU Tariff Strike on U.S. May Hinge on Election Winner

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The European Union will formally get the green light on Tuesday to impose tariffs on about $4 billion of U.S. exports, but will likely withhold fire until after the U.S. presidential election in three weeks, according to three officials familiar with the bloc’s thinking.

The size of the World Trade Organization decision over illegal state aid the U.S. provided to Boeing (NYSE:BA) Co. was reported by Bloomberg last month. The award is lower than the $7.5 billion judgment granted to the U.S. last year in a parallel dispute against Boeing’s European rival, Airbus SE (OTC:EADSY).

The EU has drawn up a list of American products to hit with levies. And even though it’s targeting politically important industries for President Donald Trump and his Republican allies — including aircraft, coal, agricultural products and seafood — the bloc will likely hold off until after the Nov. 3 election in the U.S. to see if a deal is possible, said the officials, who asked not to be identified because negotiations over the dispute are private.

By waiting, the 27-nation bloc can try to reboot flagging settlement talks with Trump while waiting to see if discussions might fare better in the event former Vice President Joe Biden, the Democratic challenger who’s leading several national polls, wins the election.

The EU’s trade chief, Valdis Dombrovskis, has already indicated the difficulty in negotiating with the current White House.

“Probably under a new administration it would be easier because we know that the Trump administration is unfortunately supporting this unilateral action in areas of trade which is creating lots of tensions and lots of problems,” Dombrovskis told members of the European Parliament earlier this month.

Over the past three years the U.S. has imposed tariffs on European exports of steel and aluminum and threatened duties on billions of dollars of European goods if France and other European nations follow through with their plans to collect taxes on digital companies like Facebook Inc (NASDAQ:FB). and Alphabet (NASDAQ:GOOGL) Inc.’s Google.

Tony Blinken, a foreign policy adviser for Biden’s 2020 presidential campaign, said the Democratic contender wants to end Trump’s “artificial trade war” with Europe.

‘Fair Approach’

“Instead of hurting our own citizens and fighting with our democratic allies, we ought to be working on a fair approach to international trade and investment,” Blinken said during a webinar hosted by the U.S. Chamber of Commerce.

While officials in the Trump administration and the EU both argue that now is the moment to engage in negotiations to settle the WTO aircraft dispute — which has been going on for 16 years — neither side appears any closer to a reaching a solution.

U.S. Trade Representative Robert Lighthizer, who has rejected all the EU’s settlement proposals, said he’s seeking two things: A pledge from Europe to end its subsidies to Airbus and monetary compensation. “It is going to require commitments not to do it again but also paying back some element of the subsidy,” Lighthizer said in a Chatham House event in July.

But European industry officials argue that the U.S. demands are too heavy-handed and the pandemic has complicated the prospects for a deal.

Both the U.S. and EU are mulling ways to support their airline industries through a period in which global travel restrictions have hammered passenger air travel.

European officials say that, ultimately, a comprehensive deal on aircraft subsidies is in both America and Europe’s best interests if they want to curb China’s massive subsidization of its domestic aerospace industry.

A transatlantic aircraft accord could help accelerate the process of restraining “other competitors which may emerge in this area of civil aviation,” Dombrovskis told Bloomberg TV.

©2020 Bloomberg L.P.