WTO deals tariffs blow to EU over Airbus subsidies case

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Airbus was unfairly given subsidies - and the US can claim them back, the WTO has said.

The European Union was dealt a blow this week after the World Trade Organisation (WTO) agreed the US could impose tariffs on it as part of a prolonged disagreement over subsidies given to the plane maker Airbus.

Set to be officially published on September 30th 2019, the ruling is the final decision in a 15-year case in which the US complained that the governments in Europe had illegally provided subsidies to the major manufacturer in a bid to put it at an economic advantage over its foreign competitors, including American Boeing.

The decision means America can now impose a raft of new tariffs on European goods to recoup its losses and - although the WTO must still authorise a specific sum - the US Trade Representative has already prepared two lists of taxable products that include fish, wine, leather goods and carpets.

US president Donald Trump had already imposed tariffs on European steel and aluminium and threatened to tax cars by the end of the year, but the stage was set for the current ruling when the WTO ruled in May that Europe had illegally subsidised Airbus to the detriment of Boeing.

Analysts are concerned this latest development will set off another tit-for-tat tariff battle between two economic superpowers, with that between China and the US already hitting global trade hard.

Meanwhile, the WTO is also investigating a parallel case brought against the US by the EU that alleges American subsidies were also provided to Boeing.

The EU claims billions of dollars' worth of financial support was given to the company illegally, with a decision expected in that case early in 2020.

Should the WTO rule in Europe's favour, the bloc could have the grounds for retaliation and impose its own tariffs on American goods.

Ultimately, this could be damaging for businesses on either side of the Atlantic hoping to trade with each other.