BRUSSELS (Alliance News) - Proposed US tariffs aimed at counterbalancing European aircraft subsidies are "greatly exaggerated," a European Commission source said Tuesday, after Washington put forward a list of products following a recent World Trade Organization ruling.
European aircraft manufacturer Airbus SE, the beneficiary of the subsidies, said the proposed measures were "totally unjustified".
A 15-year saga between the US and the EU over their main aircraft makers, Boeing Co and Airbus respectively, ended last month at the WTO, when the global trade body ruled that the US failed to stop some subsidies for Boeing.
The WTO previously declared European subsidies for Boeing rival Airbus illegal. In May 2018, it also found that the EU had failed to scrap its support for Airbus.
Final issues about the value of damage are still in arbitration.
"The administration is preparing to respond immediately when the WTO issues its finding on the value of US countermeasures," said US Trade Representative Robert Lighthizer on Monday. The USTR estimates the harm from the EU subsidies to be USD11 billion annually.
US President Donald Trump threatened Tuesday to add tariffs on an equivalent amount of goods from the EU.
"The World Trade Organization finds that the EU subsidies to Airbus has adversely impacted the US, which will now put Tariffs on USD11 billion of EU products!" Trump tweeted. "The EU has taken advantage of the US on trade for many years. It will soon stop!"
The EU Commission said earlier it "takes note" of the announcement, which initially relates to Airbus, the EU source said on condition of anonymity.
"The EU is confident that the level of countermeasures on which the notice is based is greatly exaggerated," he added, noting that the USTR figure is "based on US internal estimates that have not been awarded by the WTO".
"The amount of WTO authorized retaliation can only be determined by the WTO-appointed arbitrator," the source further noted.
Likewise, regarding the Boeing dispute, the EU will ask the WTO arbitrator to "determine the EU's retaliation rights," the commission source said.
Monday's move by Washington indicates that the US may be preparing for retaliation rather than a diplomatic solution. Nonetheless, the EU said it was "open for discussions with the US".
The list of proposed items from various European countries ranges from helicopters to food and fabrics. Some glass and metal products would also be subjected to new tariffs under the proposal, which must still undergo a public consultation process.
In a statement, Airbus said it had taken "all necessary measures to comply" with the WTO ruling against the EU and accused Boeing of not showing "any willingness to comply" with the WTO ruling against the US.
"The adoption expected this week of the WTO report will allow [the] EU to start sanctions proceeding with far larger countermeasures against the US," Airbus said. "This would lead to unnecessary trade tensions and that shows the only reasonable solution is a negotiated settlement."
Airbus Ord (0KVV)