IN RESPONSE to a World Trade Organisation (WTO) decision that permits the US to impose retaliatory import tariffs on US$7.5 billion of European Union goods, the Office of the US Trade Representative (USTR) will hike the duty on imported EU aircraft from 10 to 15 per cent, starting from March 18.

According to European aircraft manufacturer Airbus such a tariff increase on European aircraft would result in "more instability for US airlines that are already suffering from a shortage of aircraft."

The WTO first authorised the US tariffs in an October 2 decision involving a row over subsidies that various European countries provide to commercial aircraft manufacturer Airbus. The US responded immediately by implementing tariffs across a range of EU products, including alcoholic beverages, cheeses and kitchen cutlery. The tariffs range from 10 to 25 per cent.

"The United States remains open to a negotiated settlement that addresses current and future subsidies to Airbus provided by the EU and certain current and former member states," USTR said in a Federal Register notice expected to be published this week, reported American Shipper.

Airbus said in a statement that it "deeply regrets USTR's decision to raise tariffs on aircraft imported from the EU," adding the action "further escalates trade tensions between the US and the EU, thereby creating more instability for US airlines that are already suffering from a shortage of aircraft."

Airbus warned that the EU is expected to receive authorisation from the WTO to impose tariffs against imports of Boeing planes, such as the B737Max, B787 and B777 series, in May or June. Boeing is struggling to recover from widespread safety issues involving its new B737Max aircraft.

The Distilled Spirits Council of the United States (DISCUS) urged the US and EU to "de-escalate this trade dispute by simultaneously removing the US tariffs on EU beverage alcohol products and the EU's tariff on American whisky."

The US imposed a 25 per cent tariff on various European whiskeys on October 18. However, since June 22, 2018, the EU has had a 25 per cent retaliatory tariff on imports of American whiskey in response to US tariffs on aluminium and steel. The EU is scheduled to increase its tariff on American whiskey imports to 50 per cent in spring 2021.