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US and EU End 17-Year Tariff-Fueled Trade War

The U.S. and the European Union (EU) have finally closed the door on their 17-year dispute over subsidies for aircraft giants Boeing and Airbus, putting an end to $11.5 billion in tit-for-tat tariffs imposed by the former Trump administration.

The U.S. and EU in March agreed to suspend all tariffs for four months as they focused on resolving their years-long dispute. On Tuesday, during President Biden’s visit the two sides reached an agreement suspending tariffs for five years, provided they uphold the terms of the agreement. The tariffs impacted a wide range of goods, including fashion items like luxury handbags, wool sweaters and vests, cashmere, and cotton, as well as the luxury tailors of Savile Row.

“Instead of fighting with one of our closest allies, we are finally coming together against a common threat” in China, Katherine Tai, U.S. Trade Representative, said Tuesday in a video call.

The accord comes at a time when both sides are re-engaging in a reboot of their long-standing alliance taking on China. And the agreement reached over aircraft subsidies also includes a commitment by both sides to end a separate dispute over steel and aluminum.

Tai, speaking to journalists on Tuesday in Brussels, said both sides would continue talks over how to address other issues that include the outstanding aircraft subsidies already paid.

Ursula von der Leyen, European Commission president, on Tuesday said the agreement “opens a new chapter” in the relationship as the two move from litigation to cooperation on aircraft.

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The accord was announced on the first day of the U.S.-EU summit in Brussels.

Separate from aircraft dispute, the agreement sets the stage to de-escalate the rancor over trade practices that was the hallmark of the former Trump administration and paves the way for a new era focused on cooperating toward common ground.

The U.S. in 2019 imposed $7.5 billion in duties on European exports following a World Trade Organization ruling on improper subsidies to French plane maker Airbus. Tariffs were imposed on items such as French wine, Italian cheese and German cookies. A year later, the EU retaliated with $4 billion in tariffs on U.S. goods—ranging from American spirits such as bourbon to Harley-Davidson motorcycles and Levi’s jeans—in connection to WTO rulings on illegal subsidies to American aircraft maker Boeing.

Apparel, footwear and travel goods are already some of the most heavily tariffed goods, with little ability to absorb additional tariffs. The American Apparel & Footwear Association said the industry has requested on a number of occasions a suspension of the retaliatory tariffs.

“It is long past time to re-forge an enduring transatlantic partnership,” Steve Lamar, AAFA president and CEO, said. “This outcome is only possible if we eliminate trade frictions, align around shared values, and pursue common approaches that support economic prosperity in global value chains that thread through Europe and the United States.”