EU-US war escalates over aviation sops

The European Union is preparing retaliatory tariffs against the US over subsidies to Boeing Co, significantly escalating transatlantic trade tensions, hours after Washington vowed to hit the EU with duties over its support for Airbus SE.

The two sets of punitive measures are the latest twists in a 14-year-old dispute that the US and the EU have fought at the World Trade Organisation (WTO), with each side accusing the other of illegally subsidising their main aircraft makers. US President Donald Trump’s administration on Monday said it would impose tariffs on $11 billion in imports from the EU because of the European aid.

The Office of the US Trade Representative said that the EU’s support for Airbus had caused adverse effects when announcing the new measures, which would target European goods, including jetliners, cheese, wine and motorcycles. The EU called the sum cited by the USTR ‘greatly exaggerated’ and said preparations were under way to hit back.

For a level-playing field

Robert Lighthizer, the US trade representative, said on Monday, “Our ultimate goal is to reach an agreement with the EU to end all WTO-inconsistent subsidies to large civil aircraft.” He added, “When the EU ends these harmful subsidies, the additional US duties imposed in response can be lifted.” Boeing said the company supports the US Trade Representative and his team in their ongoing efforts to level the playing field in the global aircraft marketplace. While the EU hasn’t disclosed the amount of American goods it would target, Airbus said the bloc would proceed with far larger countermeasures against the US.

The heightened tensions come as the 28-nation EU works toward approving a mandate for the European Commission — the bloc’s executive arm — to negotiate cuts in industrial tariffs with the Trump administration. The new tensions may complicate those efforts, which are part of European attempts to ward off American threats of separate duties on foreign autos and car parts.

EU open for dialogue

European officials underscored the option of reaching a negotiated solution with the US that would avoid an escalation with tit-for-tat tariffs.

Whether the tariffs will enter into force will also depend on whether there will be an agreement between the EU and the US about the treatment of subsidies for the aviation industry, a German Economy Ministry spokeswoman said in an emailed statement. The EU is open to the US offer for dialogue to reach a fair solution.

The threatened American tariffs, which come after the WTO ruled in May that Airbus had received illegal funding for its A380 and A350 models, costing Boeing sales, would be implemented only after the WTO gave the final go-ahead this summer, the administration said, marking a rare show of faith in an institution that Trump himself has assailed.

Airbus said in a statement that the US tariff threat was totally unjustified and that it had taken all necessary measures to comply with the WTO ruling regarding illegal aid.

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