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WTO Greenlights EU Tariffs on $4 Billion US-Made Products

Weeks out from a high-stakes and highly contentious election, the World Trade Organization has awarded the E.U. with a trump card that stands to rattle U.S. trade with Europe.

On Wednesday, the WTO opened the door for the European Union to impose tariffs on American goods worth $4 billion, Reuters reported, as a means of hitting back against subsidies for American airplane manufacturer Boeing.

Washington levied new duties on $7.5 billion worth of E.U. products last year, the result of a WTO arbitration decision on damages stemming from Airbus subsidies that U.S. lawmakers believe hurt Boeing. Legislators quickly struck back, imposing tariffs on E.U. imports to pay down the damages owed.

The 16-year conflict represents the largest global corporate trade dispute ever seen, Reuters reported.

The two parties were informed of the WTO’s decision on Friday, and it is expected to be published publicly within weeks. Sources on both sides of the issue told Reuters that E.U. tariffs on Boeing jets, for example, were not likely to be enacted before Election Day on Nov. 3.

The introductory list of E.U. imports slapped with new duties in 2019 included handbags over $20, wool sweaters and vests, cashmere, cotton, men’s and boys’ suiting, and women’s and girls’ cotton pajamas.

In August, the Trump administration revised the list, removing Greek and German cheeses, along with Scottish shortbread products—a likely placatory move on the part of the U.S. in negotiating a separate bilateral trade agreement with the U.K.

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French and German jams were added, seemingly sending a signal to France to capitulate to U.S. trade demands or risk incurring more duties. In July, the administration announced increased duties of 25 percent on $1.3 billion worth of goods from France in response to the country’s Digital Services Tax (DST), including luxury handbags.

Players on each side of the issue will likely claim victory in light of the new award, according to Reuters. The E.U. said the latest decision doesn’t take into account the $4.2 billion worth of tariffs, yet unused, awarded in an earlier case, which would give the region $8.2 billion in duties to levy against the U.S.

On the other side, U.S. sources told Reuters that the previous award, which indeed granted the E.U. authority to impose tariffs due to special treatment for U.S. exporters, has expired because the law that created the disputed system was repealed in 2006. The WTO said it would not comment on previous rulings on the former system of U.S. Foreign Sales Corporations.

The decision, when formally announced, could act as a release valve for years of built up tension, though the issue is likely far from being at rest. “Everybody’s been waiting for this. It sets the stage for a negotiation,” William Reinsch, a former senior U.S. Commerce Department official and trade expert at the Council on Strategic and International Studies, told Reuters.

Meanwhile, tariffs remain a contentious issue for U.S. companies doing business in China. More than 3,500 firms, including household apparel names like Ralph Lauren and Target, have joined a massive lawsuit suing the Trump administration and seeking refunds for what they allege to be unfair List 3 and List 4 tariffs on China-made goods.