The Biden administration on Thursday announced it is suspending some tariffs on the United Kingdom as the U.S. seeks allies to counter growing threats from “non-market economies” like China.
The UK, when it was part of the European Union, was a party to a European WTO challenge against U.S. subsidies for Boeing. The EU hit the U.S. last year with WTO-sanctioned tariffs that targeted U.S. commodities like cheese and wine. Meanwhile, the U.S. was levying its own tariffs on the EU to punish it for subsidizing Airbus.
While the impact of the U.S. lifting tariffs on some British products may have little effect on American farmers, it shows that the Biden administration is following through on promises to amass the support of allies before it confronts China, which currently maintains billions of dollars' worth of tariffs on U.S. agricultural commodities. Many of those tariffs are not currently in effect as a result of the “phase one” deal struck between the U.S. and China in February last year.
But Joe Glauber, a senior fellow at the International Food Policy Research Institute and former USDA chief economist, warns that the Chinese tariff-relief is not permanent and is only the result of arbitrary decisions by the government to temporarily exempt some U.S. farm products from the tariffs.
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“The United States will now suspend retaliatory tariffs in the Airbus dispute from March 4, 2021, for four months,” the Office of the U.S. Trade Representative said in a statement. “This will allow time to focus on negotiating 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.”
China has been beefing up its aerospace industry and the Commercial Aircraft Corporation of China, affiliated with the Chinese military, is a growing competitor to companies like both Boeing and Airbus, according to a recent report by the Asia Times.
The UK announced in December that it was suspending its tariffs on the U.S. that were tied to the WTO ruling on Boeing subsidies, which was generally viewed as a goodwill gesture and sign that the British were hoping to quickly resume negotiation for a free trade agreement once the Biden administration took power in January.
British International Trade Secretary Liz Truss said then that the UK wanted to “de-escalate the conflict and come to a negotiated settlement, so we can deepen our trading relationship with the U.S.”
At the time, though, President Donald Trump’s USTR dismissed the gesture.
“Only the EU sued the United States at the WTO,” the agency said. “The UK did not bring a case in its individual capacity. Therefore, the UK has no authority from the WTO to participate in any such action after it no longer is part of the EU.”
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