There has been a noteworthy development on both the global tariff, commercial aerospace and certain consumer goods segments.

Late last week the European Union and the United States agreed to a four-month suspension of tariffs that were generated over years-long disputes regarding direct government aid provided to commercial aircraft manufacturers Airbus or Boeing.

Boeing 787 Production Line

U.S. President Joe Biden and European Commission President Ursula von der Leyen agreed to this move on call conducted on Friday of last week.  Key elements of this negotiated move reportedly include addressing disciplines on future support in the commercial aerospace sector and in addressing termed “trade-distortive practices” of new entrants in this sector from non-market economies such as China.

The Airbus and Boeing related tariff actions, which were authorized by the World Trade Organization under existing global trade agreements, had targeted a reported $11.5 billion of multi-industry goods traded among the two economies, including luxury goods, luggage, wine and spirits.

Certain tariffs imposed on U.S. produced whiskey, Harley Davidson motorcycles and some other goods will remain in place because they were imposed to retaliate against the Trump Administration’s imposition of tariffs on steel and aluminum products. Such efforts were indeed the collateral damage incurred by the larger disputes involving rival commercial aircraft competitors.

The Biden Administration’s nominee to be U.S. Trade Representative, Katherine Tai, has indicated in U.S. Senate testimony that she remains eager to resolve the aircraft subsidies dispute. She must also develop a policy related to the ongoing tariffs being imposed among China and the United States.

Further last week, the United States indicated it would suspend retaliatory tariffs on United Kingdom products that were also caught up in the aircraft subsidy actions.

While this development provides some optimistic news, Aerospace and various multi-industry supply chain management teams will need to monitor these ongoing geo-political developments involving the globe’s largest economies. It further provides an indication that a negotiated settlement when achieved could help commercial aircraft supply networks some added confidence for more stability in relationships among the globe’s dominant aircraft manufacturer’s .

 

© Copyright 2021, The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.