U.K. to Drop Tariffs on U.S. Goods in Airbus-Boeing Dispute

The U.K. government said it will drop the tariffs that the EU had imposed on $4 billion of U.S. goods, part of the long-running dispute over illegal aid to aircraft manufacturers Boeing Co. and Airbus SE.

The move is designed to reduce trade tensions with the U.S. and “show that the U.K. is serious about reaching a negotiated outcome,” the Department for International Trade said in a statement. Britain will set its own tariff policy when it completes its split from the EU at year-end.

The EU announced the tariffs, which target various Boeing models and products including spirits, nuts and tractors, in November as part of a tit-for-tat escalation against the U.S. -- which itself imposed levies on $7.5 billion of EU products in 2019. British exports ranging from Scotch whisky to biscuits to clotted cream have suffered from the duties.

Britain is “showing the U.S. we are serious about ending a dispute that benefits neither country,” International Trade Secretary Liz Truss said in the statement. “We want to de-escalate the conflict.”

The U.K. said it will continue to impose tariffs in retaliation to levies placed on Britain’s steel industry by the U.S. Those duties target a long list of U.S. items, including steel and aluminum products, plus a range of other goods like textiles and foods.

Britain’s move is “good news” for aviation in both the U.S. and U.K., Boeing said.

“This suspension of harmful tariffs allows us to work with the U.K. as a global commercial aviation hub and offers continued support for our employees in Puget Sound and Charleston,” the Chicago-based company said in a statement. “We support a level playing field with free and fair competition across aviation.”

Boeing is uprooting the 787 Dreamliner program from a storied manufacturing hub north of Seattle and shifting the work to a non-union plant in South Carolina amid slumping sales of wide-body jetliners.

A spokesman for U.S. Trade Representative Robert Lighthizer didn’t immediately respond to a request for comment.

The U.K. has in recent months engaged in its own discussions with the Trump administration about finding a resolution to the aircraft dispute and has been pushing hard for the U.S. to lift tariffs on Scotch whisky in particular. But because of Airbus’ significant presence in France and Germany any real deal is likely to have to involve the EU.

The bloc’s trade commissioner, Valdis Dombrovskis, last week said the U.S. and Europe were engaged in intense negotiations. He added that “it’s possible” that both sides will reach an agreement by Jan. 20 governing aid to Boeing and Airbus. He reiterated an offer to remove EU retaliatory tariffs on $4 billion of American goods if the U.S. does the same for its duties on $7.5 billion of European products.

Stephen Vaughn, who served as Lighthizer’s right-hand man until last year, said the U.K.’s move was helpful from a U.S. perspective and a sign of goodwill. It also would put pressure on the EU, he said.

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