EU plots tariff retaliation in aircraft subsidy row with US
The European Union has begun preparations to retaliate over Boeing subsidies, an EU official said yesterday, a day after Washington listed EU products it plans to hit with tariffs in their aircraft dispute.
On Monday, the US Trade Representative proposed a range of EU products ranging from large commercial aircraft and parts to dairy products and wine to target as retaliation for Airbus subsidies.
A European Commission source said yesterday the level of proposed US countermeasures was "greatly exaggerated", adding the amount of retaliation could only be determined by a WTO arbitrator.
"In the parallel Boeing dispute, the determination of EU retaliation rights is also coming closer and the EU will request the WTO-appointed arbitrator to determine the EU's retaliation rights," the commission source said, adding that it was preparing so that it could take action after the arbitrator's decision.
Airbus said it saw no legal basis for the US move and warned of deepening transatlantic trade tensions.
The EU is already facing US tariffs on its steel and aluminium exports and US President Donald Trump has repeatedly threatened to hit EU cars with punitive duties.
French Finance Minister Bruno Le Maire told a conference in Paris the two sides needed to reach a friendly agreement.
"When I see the situation global growth is in, I don't think we can afford to have a trade conflict even if only on the specific issues of the aircraft industry in the United States and Europe," he said.
The two sides are closing in on the climax of a record subsidy dispute that has been grinding its way through the WTO for almost 15 years.
Both sides have won partial victories in claiming Airbus and Boeing received unlawful subsidies but disagree on the amount involved and whether each has complied with earlier WTO rulings.
The US tariffs proposal put pressure on shares in European makers of aircraft and aerospace suppliers, wine, cheese and luxury goods.
Airbus shares were down 1.6pc early yesterday on the news. Airbus suppliers such as Safran and Leonardo also saw shares fall.
"Get ready for more tit-for-tat scrapping to follow," said John Woolfitt of Atlantic Markets.
Moody's said US tariffs are a risk to global growth.