U.S. Suspends Punitive Airbus Tariffs on British Luxury Imports

March 4, 2021

LONDON — A host of luxury businesses across the U.K. breathed a sigh of relief on Thursday as the U.S. confirmed it was canceling punitive tariffs on British imports linked to the long-running Airbus dispute.

The tariffs will be suspended for four months, and follows Britain’s decision to suspend retaliatory charges on U.S.-made goods starting this year.

The move will be a boon for makers of cashmere, Savile Row suits, whisky and gin which had been caught in the crossfire of the aircraft manufacturing dispute, and had been suffering from the onerous tariffs for the past 18 months.

It will also be welcome news for businesses that are struggling with rafts of red tape following Brexit, and from the British government’s decision to wipe out the tax-free shopping program for international tourists in the U.K.

The U.S. and the U.K. said in a joint statement that the suspension of tariffs would “ease the burden on industry” and allow both countries to take “a bold, joint step toward resolving the longest running disputes at the World Trade Organization.”

The countries also said they would seek “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.”

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The two countries are also in talks about a free trade agreement following Britain’s exit from the EU.

Helen Brocklebank, chief executive officer of Walpole, an association of more than 200 British luxury businesses, said the news was welcome and that brands including Dunhill, Glenfiddich Whisky, Hendrick’s Gin, and knitwear producer Johnstons of Elgin would benefit.

“Walpole fought in every corner to get these tariffs abolished. This suspension is a very welcome relief and, hopefully, signals that our government and the new U.S. administration will break new ground with a speedy free trade agreement.

“It’s imperative that both sides are now successful in reaching a negotiated settlement resulting in the permanent removal of the tariffs. It’s a much-needed intervention as the British luxury sector recovers from the pandemic.”

The tariffs had been a major headache for luxury producers, which were always concerned that the U.S. would hike them to 100 percent — which it could have done at any point.

As of 2020, the U.S. tariff orders covered $7.5 billion worth of European imports, with 15 percent duties on aircraft and 25 percent on other goods.

The Airbus-Boeing subsidies dispute is a never-ending story, the longest running trade dispute in the history of the WTO. The U.S. accused Europe of unlawfully subsidizing the manufacture of Airbus planes, while Europe said the U.S. was doing the same with Boeing.

The dispute saw the U.S. slap tariffs on luxury goods exported by the U.K. and the EU.

Even though Airbus has promised to stop accepting government subsidies, the crossfire continues. For its part, the EU continues to allege that the U.S. aids Airbus competitor Boeing, and it has kept its punitive tariffs in place.