Business

U.S. proposes more tariffs on EU goods, escalating Airbus-Boeing subsidy dispute

FILES-FRANCE-US-EU-TRADE-AIRBUS
An Airbus A350-1000 conducts a test flight in France in February.
(Guillaume Souvant / AFP / Getty Images)

The U.S. added more European Union products to a list of goods it could hit with retaliatory tariffs in a long-running transatlantic subsidy dispute centered on Boeing Co. and European plane maker Airbus.

The Office of the U.S. Trade Representative published a list Monday of $4 billion worth of EU goods to target in retaliation for European aircraft subsidies. The products include cherries, meat, cheese, olives and pasta, along with some types of whiskey and cast-iron tubes and pipes. It adds to a list of EU products valued at $21 billion that the office published in April, according to the release.

The EU has a similar case pending against Boeing and has readied retaliatory tariffs of its own. Though the dispute predates President Trump’s efforts to overhaul America’s big trading relationships, the timing of the latest punitive measures will exacerbate already strained ties between Washington and Brussels.

The airplane subsidy spat and the tariffs both sides are threatening contrast with the Trump administration’s other high-profile trade moves because they’re playing out under World Trade Organization rules rather than by unilateral White House authority. Under Trump, the U.S. has called for sweeping changes at the Geneva-based WTO and is blocking nominees to its appeals panel — a move that may paralyze the institution’s dispute-settling capacity by year’s end.

The latest U.S. targets were identified after a two-day hearing in Washington in May when 40 stakeholders made their cases about the countermeasures. The trade representative’s office said a public hearing on the proposed additional $4 billion worth of products will be held Aug. 5.

The trade representative’s office estimates the EU subsidies to Airbus cause approximately $11 billion in economic harm to the U.S. annually. The WTO has found the EU subsidies violate international trade rules, and it’s expected to decide this summer on the amount of countermeasures the U.S. can impose.

“The final list will take into account the report of the WTO arbitrator on the appropriate level of countermeasures to be authorized by the WTO,” the trade representative’s office said Monday.

Airbus shares fell as much as 1.4% in Paris on Tuesday. The European plane maker, which has repeatedly called for a negotiated settlement, said by email that the U.S. proposal will only add to tensions.

“That is not creating a healthy environment for working towards a negotiated solution and risks a wide variety of industries on both sides of the Atlantic to arrive in a lose-lose situation,” Airbus said.

While senior EU officials expect the U.S. to move forward with retaliation once the WTO authorizes it, the imposition of the proposed tariffs would threaten to further strain ties as the U.S. and EU try to sit down to negotiate a trade deal.

U.S. industry groups were quick to oppose the tariffs. “U.S. companies — from farmers to suppliers to retailers — are already being negatively impacted by the imposition of retaliatory tariffs by key trading partners on certain U.S. distilled spirits resulting from other trade disputes,” the Distilled Spirits Council of the United States said in a statement.

The EU has its own pending WTO case against Boeing. The EU in April published its preliminary list of U.S. goods being targeted in a $12-billion plan for retaliatory tariffs over subsidies to Boeing, with a focus on farm products from areas that help form Trump’s political base. Other items in the wide-ranging target list included ketchup, nuts, video game consoles and bicycle pedals.