Recent Trade & Tariff Perspectives

June 23, 2021 | Kevin Koch Product Development Manager

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Transatlantic Civil Aircraft Trade Policy Agreements & Steel and Aluminum Tariff Dispute

Agreement to suspend tariffs in the civil aircraft dispute

On June 15, 2021, the United States and the European Union suspended tariffs, announcing a shift from confrontation to a more cooperative framework to address civil aircraft disputes. The United States and the EU also agreed to clear principles, including a shared intent that any financing for the production or development of large civil aircraft be structured on market terms. The deal will suspend tariffs ranging from 15% to 25% on $7.5B (United States applied against EU) and $4B (EU applied against the United States) for a period of five years.

A statement from United States Trade Representative (USTR) Tai reads, “Our goal was clear – to forge a new, cooperative relationship in this sector so that our companies and our workers can compete on a more level playing field. The agreement includes a commitment for concrete, joint collaboration to confront the threat from China’s non-market practices, and it creates a model we can build on for other challenges.”

The United Kingdom and the United States also made a separate agreement regarding this dispute to suspend each trading partner's tariff measures for five years, beginning on July 4, 2021.

Find the releases from each government here: EU announcement | US announcement. More details, including the other products involved in the retaliatory tariffs, can be found on the fact sheet.

U.S. steel and aluminum tariffs 

On June 15, 2021, the United States and the European Union issued a summit statement expressing a renewed transatlantic partnership. In the announcement, the two trading partners shared that they intend to “(i) end the COVID-19 pandemic, prepare for future global health challenges, and drive forward a sustainable global recovery; (ii) protect our planet and foster green growth; (iii) strengthen trade, investment, and technological cooperation; and (iv) build a more democratic, peaceful, and secure world…committed to uphold the rules-based international order with the United Nations at its core, reinvigorate and reform multilateral institutions where needed, and cooperate with all those who share these objectives.”

Section 21 of the announcement addresses the remaining dispute regarding the U.S. application of steel and aluminum tariffs against the EU, stating “We salute having reached an Understanding on a Cooperative Framework for Large Civil Aircraft, reflecting a new transatlantic relationship in this area.

We are committed to make this framework work to promote a level playing field, overcome long-standing differences, avoid future litigation, and more effectively address the challenge posed by non-market economies. We will engage in discussions to allow the resolution of existing differences on measures regarding steel and aluminum before the end of the year.

In this regard, we are determined to work together to resolve tensions arising from the U.S. application of tariffs on imports from the EU under U.S. Section 232 and will work towards allowing trade to recover from its 2020 lows and ending the WTO disputes.

We commit to ensure the long-term viability of our steel and aluminum industries, and to address excess capacity.  We are determined to foster a fair, sustainable, and modern international tax system and cooperate to reach a global consensus on the question of taxation of multinational companies through the G20/OECD Inclusive Framework and look forward to reaching an agreement at the July meeting of G20 Finance Ministers and Central Bank Governors.”

Note that the EU had already suspended the plan to double the current retaliatory tariffs against the U.S. steel and aluminum duties that was to begin in June. That suspension was announced on May 17, 2021, and is set to last for six months. We will watch this situation closely and be sure to advise our clients on any sudden changes on either front.

If you have any questions on this week’s content or need help obtaining your historical trade data to analyze the effects of these events on your supply chain, our Trusted Advisor® experts are here to help.

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