- The US has threatened tariffs on $US11.2 billion worth of European Union products, citing subsidies to Europe’s largest aircraft maker, among other issues.
- The US trade representative on Monday said the World Trade Organisation “repeatedly” found that EU subsidies to the French plane maker Airbus “caused adverse effects” to the US.
- The move continues a long-running rivalry in which the US and the EU accuse each other of unfairly subsidizing aircraft manufacturers.
- The American plane maker Boeing, Airbus’ largest rival, faces its biggest crisis in decades over two fatal plane crashes that could threaten the reputation of the US aviation industry.
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The US is threatening the European Union with tariffs on $US11.2 billion worth of goods over subsidies to Europe’s largest aircraft maker, Airbus, just as its American rival Boeing endures its most difficult period in decades in the fallout from two fatal plane crashes.
The US trade representative on Monday said the World Trade Organisation had found “repeatedly that European Union subsidies to Airbus have caused adverse effects to the United States.”
Trade Representative Robert Lighthizer identified EU products including wine, cheese, and Airbus aircraft that could face tariffs when shipped to the US.
The US government did not link the sanctions to Boeing’s troubles, instead citing a years-long dispute over subsidies. The optics of the move will nonetheless be noticed, especially as criticism mounts of the close relationship between Boeing and the US government.
The US in 2004 first accused the EU of subsidizing aircraft made by the French plane maker Airbus, a case with the WTO that has yet to be resolved. The EU has also accused the US of subsidizing aircraft made by Boeing, and the WTO has found that both the EU and the US were giving improper subsidies.
“This case has been in litigation for 14 years, and the time has come for action,” Lighthizer said on Monday.
The list of items subject to tariffs will not be finalised until the WTO rules on a challenge from the EU, the statement said.
US President Trump tweeted on Tuesday that the TWO had found the EU subsidies “adversely impacted the United States.”
“The EU has taken advantage of the U.S. on trade for many years. It will soon stop!” he wrote.
The World Trade Organization finds that the European Union subsidies to Airbus has adversely impacted the United States, which will now put Tariffs on $11 Billion of EU products! The EU has taken advantage of the U.S. on trade for many years. It will soon stop!
— Donald J. Trump (@realDonaldTrump) April 9, 2019
Lighthizer’s statement comes as Boeing, Airbus’ biggest rival, faces a crisis prompted by two air disasters.
Two of its 737 Max planes crashed five months apart, killing everybody on board: one operated by the Indonesian airline Lion Air and the other by Ethiopian Airlines.
The plane is one of Boeing’s best-sellers but has now been grounded around the world as Boeing works on a fix to its anti-stall software system, which is thought to be at the center of both crashes.
Boeing on Friday announced plans to cut production of the plane to 42 a month from 52, and investors have expressed concern over the long-term impact of the crashes on the manufacturer.
An Indonesian airline tried to cancel its order for Boeing 737 Max aircraft in the wake of the crash, while a Chinese aircraft-leasing firm canceled $US5.8 billion in orders for the 737 Max.
China also signed a $US34 billion order for 300 Airbus planes the day after it suspended the airworthiness certificate for the Boeing jets.
Boeing’s crisis has also spread to the Federal Aviation Administration, where scrutiny has intensified over its practice of allowing Boeing to carry out much of US government’s regulatory work itself.
The crisis over the 737 Max crashes is Boeing’s toughest period in decades. The company struggled during the 1970s recession and had a difficult launch in the 2000s for its 787 Dreamliner. Christine Negroni, an aviation writer and the author of The Crash Detectives, told NPR that Boeing was in a tougher position now.
“I cannot remember a more heart-wrenching time in my career with this great company,” Boeing CEO Dennis Muilenburg said last week, apologizing after the crashes.
The crisis, coupled with President Donald Trump’s close relationship with Boeing, may also be threatening the reputation of the US as the leader in aviation, experts told Business Insider.
Michael Dreikorn, a former FAA official who also previously served as vice president of quality and compliance for the jet-engine maker Pratt & Whitney, said he thought the FAA was taking a “credibility hit globally” as a result of the two crashes.
“The US’s reputation can take a hit,” he said. “And it probably should take a hit.”
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