Row over Airbus subsidies continues with US threats

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The EU has said it will not take US tariff threats lying down.

The European Union has said it will have no choice but to retaliate if the US goes ahead with a threat to apply tariffs to its goods in a continuing dispute over aircraft subsidies.

Last October, the World Trade Organization (WTO) controversially ruled that not only were subsidies given by the EU to manufacturer Airbus in 2004 illegal, but that it was continuing to subsidize Airbus A380 and A350 jetliners as a result of past European loans.

Consequently, the US imposed compensatory tariffs of between 15 and 25 per cent on billions of euros' worth of European goods, including cheese and whisky.

However, it said last month that it is also considering a new raft of taxes on additional EU trade, something Brussels has criticized as excessive force.

The new rules would apply to businesses supplying products such as beer, gin and olives, something that could severely impact many smaller companies in nations such as Spain that had previously been unaffected by the spat.

A series of tit-for-tat tariffs had already been imposed, with the US taxing EU steel and aluminum and the EU responding by taxing American-made jeans and motorcycles.

In response to the latest news, Europe's trade commissioner Phil Hogan told the European Parliament's trade committee the EU will not stand back and let the US do what it wants. He also claimed Donald Trump's administration has rejected an attempt to settle the row.

"I want to reassure people that we are ready to act decisively and strongly on the European Union side if we don't get the type of outcome that we expect from the United States in relationship to finalizing this 15-year-old dispute," he added.

Although the WTO ruled against the EU last year, the US has not been completely innocent either. In a counter-claim, the EU alleges that American manufacturer Boeing is also being illegally supported by its own government.

The WTO agreed last year that the US had ignored its request to halt a subsidized tax break for the company, which could see the EU seek retaliatory compensation against Washington when a final decision is made this coming September.