UK set to halt US tariffs in bid for post-Brexit trade deal
The UK has broken ranks with the EU and is set to suspend tariffs against the US over subsidies, in an attempt to broker a post-Brexit trade deal.
There has been a long battle between the US and the EU relating to state subsidies for aircraft manufacturers Airbus and Boeing.
The World Trade Organisation last month authorised the EU to hit $4bn of US goods in retaliation against illegal state aid for Boeing.
The US has had parallel tariffs in place agains $7.5bn of European products in a complaint against aid for Airbus.
These include UK products such as Scotch whisky, which has had 25 per cent tariffs levied against it since October 2019.
The trade department said Britain will suspend the retaliatory tariffs from 1 January, when the divorce from the EU is complete. It indicates the country’s ambition to forge a closer relationship with the US and President-elect Joe Biden.
“As an independent trading nation once again, we finally have the ability to shape these tariffs to our interests and our economy, and to stand up for UK business,” international trade secretary Liz Truss said.
“Ultimately, we want to escalate the conflict and come to a negotiated settlement so we can deepen our trading relationship with the US and draw a line under all this,” she added.
The UK will maintain tariffs imposed by the EU after President Trump put duties on foreign steel and aluminium, however.
The department said it “reserves the right to impose tariffs at any point” should negotiations fail to lead to a settlement ending the subsidy dispute.
ADS, which represents the UK’s aerospace industry, said that it was “disappointed” by the decision to take action “without securing some reciprocal action to resolve this dispute”.
“A negotiated settlement is the best way to achieve a lasting resolution and Governments in the UK, Europe and the US must work together to reach this goal”, a spokesperson said.
Airbus said it would continue to seek a negotiated solution to the dispute to avoid “lose-lose” tariffs.
But the Scotch Whisky Association’s chief exec Karen Betts welcomed the move.
“This is a very encouraging step by the UK government and we welcome it. It shows the UK government’s determination to de-escalate the damaging transatlantic trade disputes that have seen Scotch Whisky exports to the US fall by over 30 per cent in the past year”, she said.
“We now call on the US government to reciprocate by suspending the tariffs on UK goods stemming from the Airbus/Boeing dispute, so that industries in the UK and the US affected by this dispute can once again trade freely.”
The announcement comes as the Prime Minister travels to Brussels today in a last-ditch bid to get the Brexit divorce deal over the line.
Boris Johnson is set to meet with European Commission chief Ursula von der Leyen to hammer out a last minute deal over dinner.