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The tariff fight between the world’s biggest plane makers is heating up after the US claimed Boeing’s rival Airbus was given ‘market-distorting subsidies’

The US is threatening even more tariffs on EU goods after a new World Trade Organization ruling, claiming that French aircraft maker Airbus, Boeing's biggest rival, was given “market-distorting subsidies.”

The US put tariffs on $7.5 billion worth of EU goods in October as part of a long-running case in which it alleges Airbus was given improper subsidies to help it gain market advantage in Europe.

Both the EU and the US have accused each other for over a decade of improperly subsidizing their jet makers, which are the two biggest in the world. As part of their complaints, the WTO has found that both the EU and the US were giving improper subsidies.

The WTO ruled on Monday that the EU and some of its member countries a “failed” to “take appropriate steps to remove the adverse effects” of subsidies on the US.

Christian Scherer, Airbus Chief Commercial Officer.

Reuters

Airbus had argued that the US should reduce its current tariffs on EU goods, which includes Airbus products, because US complaints about subsidies to its A380 programme were no longer relevant as the plane model is being retired.

But the WTO said that it “rejected the European Union's argument that Airbus' announcement to 'wind down' the A380 programme at present achieved the withdrawal of the French, German, Spanish and UK” subsidies.

US Trade Representative Robert Lighthizer painted the WTO ruling in harsh terms, saying: “In light of today's report and the lack of progress in efforts to resolve this dispute, the United States is initiating a process to assess increasing the tariff rates and subjecting additional EU products to the tariffs.”

He said in a statement: “Strong action is needed to convince the EU that its interest lie in eliminating these market-distorting subsidies now and in the future so that our industries can compete on a level playing field,” the Financial Times reported.

The EU accused the WTO on Monday of “serious legal errors” in the case, the FT reported.

US Trade Representative Robert Lighthizer.

Jacquelyn Martin/AP Images

A European Commission spokesperson said: “We consider that the panel has made a number of serious legal errors in its assessment of EU compliance.”

“The report also contains statements concerning workable ways to comply with the WTO rules on subsidies that would be very problematic for a larger part of the WTO membership to comply with.”

The commission might also appeal “to have these legal errors corrected”, according to the FT.

Lighthizer's statement is likely to add an extra layer of tension to the Nato summit, which kicked off in London on Tuesday.

US President Donald Trump said at a Nato press conference on Tuesday: “We're going to tax Airbus… that's going to be very good for Boeing.”

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