US cleared to impose tariffs on EU goods in Airbus trade dispute

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A new front in Donald Trump’s trade war could open up as the US is allowed to impose tariffs on EU goods after a 15-year battle.

The US has been told it can impose tariffs on £6.1bn of EU goods as part of a 15-year trade dispute over illegal state subsidies.

The ruling, by the World Trade Organisation (WTO), threatens to spark a transatlantic trade war should the Trump administration signal the sanctions will go ahead.

The WTO has found, in a dispute dating back to 2004, that both France-based Airbus and its fierce US rival Boeing received billions of illegal state aid.

                              US cleared to impose tariffs on EU goods in Airbus trade dispute

Its decision to allow the US to impose tariffs still has one further WTO hurdle to complete – expected within weeks- though that is widely tipped to be a formality.

The body is not expected to rule on the EU’s request for tariffs against the US until early next year.

The European Commission said any tariffs imposed by the US would be “short-sighted and counterproductive”.

French finance minister Bruno Le Maire said, in that event: “We will be ready to respond firmly with our European partners.

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                              US cleared to impose tariffs on EU goods in Airbus trade dispute

“A friendly resolution to the Boeing/Airbus dispute is the best solution, and all the more so given that Europe could impose sanctions on the United States next year.

He warned that a trade war risked causing damage on both sides of the Atlantic at a time when the US-China trade war is already damaging demand in the global economy.

Stock market sell-offs, linked to worries about the health of the US economy, intensified after the WTO ruling with the FTSE 100 trading more than 3% down in late deals.

There were similar falls across other major European indices while US stocks built on heavy falls of the previous day.

                              US cleared to impose tariffs on EU goods in Airbus trade dispute

The US Trade Representative has already identified Airbus jets, helicopters, wine, handbags and cheese as goods to face possible tariffs.

In the UK, where Airbus makes wings for its planes, the government said it was seeking confirmation from the WTO that the country had complied with rulings regarding support to Airbus and should therefore not be subjected to any tariffs.

France-based Airbus has warned against a “lose-lose” trade war, arguing it employs 4,000 staff at its US operations with tens of thousands more in the supply chain dependent on its work.

Boeing remains in the grip of its biggest crisis following the grounding of its 737 MAX fleet in response to two fatal crashes.

EU manufacturers are already facing US tariffs on steel and aluminium and a threat from President Trump to penalise EU cars and car parts in a tit-for-tat tariff exercise.

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