The United States suspended tariffs towards the UK. Britain had suspended its tariffs to US products last December, splitting its stance from the EU. But the matter is not over yet.
The announcement came today from the British side. The US decision seems to vindicate UK’s unilateral decision, last December. With the tariffs suspended, both sides now hope to reach a final agreement in the next few weeks. The long-running dispute has taken its toll on the World Trade Organization (WTO). The two sides now hope to resolve the matter through the WTO, restoring its role in the process.
There is some time pressure. The US suspended their tariffs to UK products for only four months. The decision will come into force from the 8th of March, but it will be backdated from today (4th). The hope is that with tariffs suspended from both sides, the next round of discussions will be much more productive. But there is small problem: the US suspension doesn’t really involve aircraft. At least not yet. Which brings us to the EU.
Suspended Tariffs, But For What?
As we have seen many times (most recently here), this issue has been dragging on for nearly 16 years now. A matter that started as a dispute on subsidies (on both sides), has escalated to tariffs on unrelated products. So today, the tariffs that the US suspended, involve UK-made Whiskey, cheese, industrial machinery and… cashmere.
The wings of just about all Airbus aircraft come from the UK. Unless the US can somehow separate tariffs between the EU and UK, the latter still suffers from punitive tariffs to the EU. The same would apply to widebody Airbus aircraft with Rolls-Royce engines. The EU has not suspended its tariffs to the US, like Britain did before the end of the year.
A joint statement between the United Kingdom and the United States, reads:
“The United Kingdom and the United States are undertaking a four-month tariff suspension to ease the burden on industry and take a bold, joint step towards resolving the longest running disputes at the World Trade Organization. This will allow time to focus on negotiating a balanced settlement to the disputes, and begin seriously addressing the challenges posed by new entrants to the civil aviation market from non-market economies, such as China.”
The last sentence above is a not-too subtle hint. The US, the UK and the EU sides know all too well that punitive tariffs to each other only benefit other players. And while such players weren’t strong before, this is quickly changing. Airbus CEO has repeatedly made similar statements in the past few weeks. And because of the large stake of UK industry in Airbus, Britain wants to see EU-US tariffs suspended, too.
Planes Up For Delivery
Meanwhile, we’re coming closer to the summer, and a much-awaited reawakening in the travel industry. And Boeing has a few MAX aircraft to deliver, to some eager new owners. We saw that TUI already took delivery of new aircraft. Many more will still go to them, to Ryanair and others, before the summer months. And there are many on both sides of the Atlantic that want those tariffs suspended before deliveries begin in earnest.
Given that Britain suspended its tariffs to the US first, it made sense for the US to return the favor. But both sides want the EU on the table. And in a White House briefing, Press Secretary Jen Psaki said so:
“[The Tariff suspension] …was meant to de-escalate the issue and create space for a negotiated settlement to the Airbus and Boeing disputes.”
Representatives for both Airbus and Boeing welcomed this development, hoping it will finally resolve this issue.