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Leeham News and Analysis
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US imposed $22m in Airbus tariffs in 2019
By Scott Hamilton
Exclusive
March 3, 2020, © Leeham News: The US Customs and Border Patrol collected $277m in tariffs last year in connection with the Airbus trade war.
Airbus’ A320 final assembly line in Mobile helped reduce the tariff exposure.
But only $22.1m was from tariffs placed directly on Airbus airplanes imported into the United States, LNA learned.
Information obtained by LNA confirmed that most of the tariffs were levied on industries and products unconnected to Airbus.
WTO fight
The tariffs, which are taxes by another name, represent the 10% levy imposed by the Trump Administration in October. This tariff was authorized by the World Trade Organization after Airbus lost the last of its appeals before the WTO. The international agency authorized the US to levy tariffs up to 100% of Airbus airplane values imported into the US from Europe.
Airplanes assembled at Airbus’ US Mobile (AL) site are exempt.
The levy increases to 15% this month.
Information obtained by LNA shows that in addition to the $22.1m levied from mid-October through Dec. 31 last year, the US collected another $11.8m on imported Airbus airplanes in January.
February data was not yet available.
US operators took delivery of nine A320 aircraft for the partial tariff year.
There were 16 A321s delivered to US operators, for a total of 25.
The Mobile FAL was producing at the rate of 5/mo, or about 13 family members. This leaves 12 imports to be taxed. The average tax computes to $1.84m per airplane.
US content is typically exempt from taxation.
There were three A220s imported from Canada, but these are not taxed.
The production rate increased to 6/mo in January.
Covid19, delta might be happy to leave some undelivered planes in Europe for now.
Bullying and blackmailing the UK and forcing it into the arms of the USA is not in Europe’s interests.
I am not understanding how the levy can only be $1.84m per plane
Maybe brcause US content makes up a big chunk?
For instance an A220 is more American (I believe around 53% American) than a B787 with Rolls Royce engines.
@Grubbie: The EU is neither bullying nor blackmailing the UK or anyone else. All pain is self-inflicted.
The self inflicted pain is the EUs
Off subject. So if the US needs the WTO to authorize to levy the tariffs for that. On what basis did Trump then impose all those tariffs on China? Why would he even need the WTO to approve them, he could anyway just do whatever he wants, no?
China: That was done under the authority granted to a president for “national security” reasons. The WTO was a formal trade complaint.
WTO nod looks good. The masses here frown but do not get irate (yet).
The “Translatlantiker” ( vulgo Euros of various ilk and occupation having a side job as US lobbyists ) in the EU would have a rather more difficult job to push US interests from inside the EU system.
This is a lesser/nonexistent issue with China.
It’s a joke. The fines to Airbus should sum up to hundreds of millions of dollars and cover the Airbus assembled in the US and Canada from kits coming mostly from Europe and beyond.
Do you want that US airlines pay even more to fly Airbus. How can they compete.
EU should put export tariffs on Airbus and let US airlines pay even more. Let US fly their own trash.
The fines for the MAX crimes shouldn’t be a joke.
Fines because FAA/government did do their job which Boeing will have to pay.
Oh … the FAA closed the Florida repair shop LOL
I hope you are of the same opinion when EU gets to put tarifs on Boeing in a couple of months.
Why not, the last Boeing products I like are 717 and 767. Delta has them and not a single Boeing on order and I’m sure they are very happy about it.
Only turboprop Embraer will be interesting, but till C919 and MC21 are not on the market I doubt the JV will happen.
Boeing couldn’t compete with faked self-certifications, how can they compete in the future.
Thank’s Leon, I was actually replying to Philippe Cauchi!
which 717? 🙂
the DC9 derivative or
the Boeing C-135 Stratolifter from the 50ties?
Tariffs are a bailout in disguise for Boeing. It is the only way it can compete with the Airbus superior product line.
Boeing sales are abysmal. Last year was the worst sales year since what 9/11?
Boeing cannot even communicate what is happening on the MAX with its top customer – Southwest.
They need new blood. The current dinosaurs who came up in sales in the 1990s just are not cutting it. Why is Calhoun always so slow to act? They need a 30 something executive – an outsides not wedded to dated ideas and sales gimmicks.
Raphael, the tariffs are not a subsidy or a bailout, they are a remediation for subsidies provided to Airbus by the EU. The EU was given the choice of ending the RLI funding, but they chose not to comply. The US was given the choice of ending tax breaks and chose to comply.
The WA state tax break for Boeing continued and that may now result in a tariff with lower limits imposed on Boeing products by the EU.
The tariff imposed thus far by the US is only a small part of the limit authorized by the WTO. It could go much higher, and almost certainly will if the EU imposes a sizable tariff on Boeing. So we can hope that cooler heads will prevail.
One can wonder if Airbus can open a new A321neo dedicated FAL in Mobile after it gets the new A321neo FAL up and running in Toulouse. Hopefully it will be very effective and can quickly be copied to the US. Lots of its parts are US made and are trucked to Alabama.
The quicker older Aircrafts can be replaced with more effective, comfortable and quieter Aircrafts the better.
It might be good and fast enough to export US built A321neo’s just like Mercedes and BMW exports SUV’s made in Southern USA, actually they are the top US made car exporting companies I red (but did not double check for 2020…)
@Scott Hamilton
could we read this 10 to 15% as an admission by the administration that Airbus planes are about 5 to 10% cheaper than Boeing – and they want to avoid creating a domestic monopoly by over-taxing (or tariffing, if that’s a thing).
Or is it more likely big T wants to avoid vocal opposition from airline-customers of airbus?
as the WTO authorized up to 100% and billions of dollars, I’m surprised they go to all this trouble of WTO only to reap a few tens of millions. I don’t think this even covers the legal fees for this circus.
Airbus aircraft are not generally cheaper than Boeing, it just depends on the aircraft in question as to relative cost.
The US goal has always been for the EU to stop RLI subsidization of Airbus. That has also been upheld by the WTO. The tariff is an incentive for them to comply with the WTO ruling, and for the US to recover some of the benefit provided to Airbus. Thus the tariff was begun at a low rate. How much will be recovered will ultimately depend on EU actions.