U.S. And E.U. Leaders Reach Truce In Retaliatory Tariffs War

U.S. And E.U. Leaders Reach Truce In Retaliatory Tariffs War

A trade dispute between the European Union and the United States dates back to 2004, when both parties accused each other of unfairly subsidizing aircraft giants Boeing and Airbus. As a result of a World Trade Organization ruling in 2018, the U.S. was allowed to impose $7.5 billion in tariffs, and the EU was allowed to retaliate with $4 billion in duties.

As a result of both sides' retributive approach, the tariffs expanded beyond aircraft manufacturers. Whether it was French wine, whiskey, or Harley-Davidson motorcycles, the tax rates ballooned. A new set of steel and aluminum tariffs was imposed on several NATO allies in 2018 that triggered an all-out trade war.

In response, the EU raised taxes on American motorcycles with a 56 percent tariff. Luckily, the E.U. relented, delaying the measures until December, 2021. This did not solve Harley-Davidson's impending trade crisis.

During the 18-year Boeing-Airbus dispute, the United States and the European Union reached a truce at a summit in Brussels, Belgium, on June 15, 2021. A tariff moratorium will be in place for the next five years under the agreement, which goes into effect July 11, 2021. The truce not only mends trans-Atlantic trade relations, but it also prepares both parties to fight a common threat in the aircraft industry: China.

However, the summit didn't resolve the ongoing aluminum-steel trade dispute, which is welcome news for American V-twin manufacturers.

Relations among the E.U. and U.S. may be improving but Harley-Davidson isn’t out of the woods just yet. In any case, both sides are hopeful that they will reach an agreement by the end of the year. Steel and aluminum overproduction in China is similar to the situation in the aerospace industry. There is no reason to be surprised if the European Union follows suit. It will take a little longer until the Motor Company can breathe a sigh of relief as Europe and the United States band together against the common enemy.

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