BRUSSELS, Belgium — The United States and the European Union reached a deal Tuesday to end a damaging dispute over subsidies to rival plane makers Boeing and Airbus and phase out billions of dollars in punitive tariffs, the U.S. trade envoy said.
U.S. Trade Representative Katherine Tai said the two sides have come to terms on a five-year agreement to suspend the tariffs at the center of the dispute. She said they could be reimplemented if U.S. companies are not able to “compete fairly” with those in Europe.
“Today’s announcement resolves a long-standing irritant in the U.S.-EU relationship,” Tai said, as President Joe Biden met with EU leaders in Brussels. “Instead of fighting with one of our closest allies, we are finally coming together against a common threat.”
The trade dispute skyrocketed under the Trump administration, and saw tit-for-tat duties slapped on a range of companies that have nothing to do with aircraft production, from French winemakers to German cookie bakers in Europe and U.S. spirits producers in the United States, among many others.
The U.S. imposed what could have amounted to $7.5 billion in tariffs on European exports in 2019 after the World Trade Organization ruled that the EU had not complied with its rulings on subsidies for Airbus, which is based in France. The EU retaliated last November with up to $4 billion in punitive duties after the WTO ruled that the U.S. had provided illegal subsidies to Seattle-based Boeing.
In March, weeks after Biden had taken office, the two sides agreed to suspend the tariffs. That suspension started on March 11 for four months. The new agreement will officially go into effect on July 11.
“This really opens a new chapter in our relationship because we move from litigation to cooperation on aircraft — after 17 years of dispute,” said European Commission President Ursula von der Leyen.
Despite the breakthrough, the deal does not end the Trump-era trans-Atlantic trade row. The former U.S. president also slapped duties on EU steel and aluminum. That move enraged European countries, most of them NATO allies, because it was justified as a measure to protect U.S. national security.
The so-called Article 232 proceeding both hurts European producers and raises the cost of steel for American companies. The EU retaliated by raising tariffs on products like U.S.-made motorcycles, bourbon, peanut butter and jeans.
Samuel Petrequin in Brussels and Jamey Keaten in Geneva contributed to this report.