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.
Washington's 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.
Washington's 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 — a move that EU officials said was designed explicitly to disrupt the company's 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, it’s a lose-lose for the whole industry if we move to tariffs," he said.
That hasn't discouraged the United States from charging ahead. U.S. officials have signaled they are ready to move quickly to impose tariffs.
One EU official described the U.S. approach as "hit first, talk later."
Brussels expects that its case against Boeing will give the bloc the right to retaliate with its own tariffs | Oli Scarff/AFP via Getty Images
A spokesperson for the European Commission said Brussels would “not comment on leaks” but has “communicated to the United States that the European Union is ready to work on a fair and balanced solution for our respective aircraft industries.”
Brussels expects that its case against Boeing will give the bloc the right to retaliate with its own tariffs next year, and hopes to strike an agreement with Washington to simultaneously lift both sanctions.
“In the parallel Boeing case, we are expecting the WTO decision on the European Union sanction rights in the coming months,” the Commission spokesperson said.
“The mutual imposition of sanctions is counterproductive and damaging to our respective economies … The EU has, as recently as July, submitted concrete proposals to the US to which there has been no reaction so far. The EU’s willingness to find a fair settlement remains unchanged.”
