Dysfunctions
US threatens EU with new tariffs over Airbus subsidies
By DW, 8/4/19
Apr 12, 2019 - 11:42:07 AM

The Trump administration has lashed out at Brussels for subsidies received by aerospace giant Airbus. A US official has described growing impatience in Washington, saying: "The time has come for action."

The White House on Monday threatened to impose new tariffs on European products over subsidies to aerospace giant Airbus.

Relations between the US and the European Union have dived under President Donald Trump, in part because of his "America First" approach that emphasizes protectionist policies aimed at shoring up American industry.

What the US Trade Representative said:

"Our ultimate goal is to reach an agreement with the EU to end all WTO-inconsistent subsidies to large civil aircraft."
"This case has been in litigation for 14 years, and the time has come for action."
When the EU ends these harmful subsidies, the additional US duties imposed in response can be lifted."

Trans-Atlantic tariffs

US Trade Representative's office said a number of civil aviation sector products could be hit with tariffs, including Airbus aircraft.

The Trump administration has previously threatened to impose tariffs on European products. Last year, it briefly imposed tariffs on European steel and aluminum.

The threat comes as Boeing, the US aerospace giant, suffers major share price losses after its 737 MAX was grounded following two deadly crashes.

Read more: Boeing crash: Can machines make better decisions than people?

Does Airbus benefit from subsidies?

For years, the US has tried to pressure the EU — especially member states France, Germany, Spain and the UK — into dropping subsidies for Airbus.

In 2011, a World Trade Organization (WTO) report found that the European aerospace company had benefited from more than €16 billion ($18 billion) in subsidies from 1968 to 2006.

The EU responded by removing certain subsidies, but Washington said that wasn't enough. The US has continued to push proceedings at the WTO, which is expected to reach a result from the arbitration later this year.