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U.S., EU Reach Deal to Suspend Airplane Tariffs

By Lou Whiteman - Updated Mar 5, 2021 at 2:52PM

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The temporary truce will hopefully lead to a permanent settlement.

The United States has reached an agreement with the European Union to suspend tariffs that are part of a nearly two-decade-old dispute over aircraft subsidies, potentially ending the long-running trade battle between Boeing (BA -0.18%) and Airbus (EADSY -2.20%).

The aerospace archrivals have been trading jabs about subsidies for 17 years, with each side scoring points against the other. Last fall, the EU won World Trade Organization (WTO) authorization for tariffs on Boeing jets. The U.S. had already imposed tariffs on certain Airbus imports as part of a broader $7.5 billion tariff package.

An Airbus A330 on the ground.

Image source: Airbus.

The tariffs were hindering both companies, as well as their airline customers. The EU has been eager to negotiate a settlement, and European leaders have been pushing the new administration in Washington to work out a deal.

On Friday, European Commission President Ursula von der Leyen, in a statement following a phone call with President Joe Biden, said the two sides have agreed to a four-month suspension of aerospace tariffs to allow time for a final deal to be worked out.

"We both committed to focus on resolving our aircraft disputes, based on the work of our respective trade representatives," von der Leyen said. "This is excellent news for businesses and industries on both sides of the Atlantic, and a very positive signal for our economic cooperation in the years to come."

The agreement comes at a time when new plane sales are being hindered by the pandemic, which has caused airlines to scale back expansion plans and add to debt to survive the crisis. The pandemic has created a new urgency surrounding the negotiations, since Boeing and Airbus can better afford the tariff costs when times are good and demand for new jets is high.

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