The United States has gotten the green light to impose billions of euros in punitive tariffs on EU products in retaliation for illegal subsidies granted to European aerospace giant Airbus.
Four EU officials told POLITICO that the World Trade Organization ruled in favor of the U.S. in the long-running transatlantic dispute and sent its confidential decision to Brussels and Washington on Friday.
The decision means that U.S. President Donald Trump will almost certainly soon announce tariffs on European products ranging from cheeses to Airbus planes. One official said Trump had won the right to collect a total of between €5 billion and €8 billion. Another said the maximum sum was close to $10 billion.
The decision sets the stage for a showdown between Europe and Washington just as the EU is transitioning to new leadership under incoming Commission President Ursula von der Leyen and Trade Commissioner-designate Phil Hogan. In unveiling her team on Tuesday, von der Leyen signaled a robust approach to transatlantic disputes on trade and other issues with the Trump administration.
Washington has previously announced it would follow through with tariffs if it won the case in Geneva and has prepared a list of EU exports worth a total of $21 billion. The U.S. can choose products from that list and then tax them at different rates in order to claw back the total amount of damage resulting from the EU subsidies. Washington has previously estimated the amount of damage resulting from EU subsidies that are still in place at $11 billion.
Washingtons tariffs in the Airbus case threaten to hit the company hard. The list of planned duties includes passenger aircraft.
Both parties now have a few weeks to add comments and delete any confidential business information before the ruling, by a WTO dispute settlement panel, is officially adopted and made public.
The ruling marks the culmination of a decades-long dispute on whether EU countries have illegally supported Airbus by granting subsidized loans known as “launch aid” and other advantages for the development of the A350 and A380 models. The U.S. first filed the complaint in Geneva against Airbus subsidies in 2006.
However, a parallel complaint by the EU, alleging illegal U.S. subsidies for Boeing, is also being examined by the WTO. A ruling in that case is expected in about eight months, industry sources said.
Washingtons tariffs in the Airbus case threaten to hit the company hard. The list of planned duties includes passenger aircraft, which would make Airbus planes more expensive in the U.S. compared to its arch-rival Boeing.
To make matters worse for Airbus, the list also contains EU aircraft parts | Sean Gallup/Getty Images
To make matters worse for Airbus, the list also contains EU aircraft parts — a move that EU officials said was designed explicitly to disrupt the companys supply and manufacturing chain by depriving the company of the parts it needs for the final assembly of its A320 model in the U.S. state of Alabama.
EU officials have warned the U.S. that such a move would end up destroying U.S. jobs.
Airbus spokesman Stefan Schaffrath declined to comment on the WTO ruling. “The WTO decision is neither public nor authorized for release. We do not comment on rumors on a report that is not public,” he said.
But he warned that both the U.S. and Europe would lose from a tariff war. “Nobody will win, its a lose-lose for the whole industry if we move to tariffs,” he said.
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