The World Trade Organization has authorized the U.S. to retaliate against the European Union over illegal subsidies to Airbus in a decision that may further escalate trade tensions.
A WTO arbitration panel ruled Wednesday that the U.S. could levy import tariffs on up to $7.5 billion worth of European goods. The decision in a 15-year dispute over subsidies to Airbus and Boeing fell short of Washington’s request for tariffs on up to $11 billion of EU goods.
But the U.S. Trade Representative is expected to move quickly to narrow down a preliminary list of goods in line for tariffs, with eligible products ranging from Airbus jets themselves to helicopters, wine, spirits, handbags and cheese.
According to The New York Times, the ruling — the largest authorized retaliation in the WTO’s history — “could tip off a further escalation, worsening tensions between the United States and the European Union that have already been strained by President Trump’s confrontational approach to trade.”
Markets fell Wednesday in the wake of fresh evidence that the trade war is weighing on the global economy. In the parallel case against the U.S. for subsidizing Boeing, the EU has drawn up its own list of $20 billion in American products it could tax.
“We already have too many tariffs in the world, so it would be unfortunate [for the U.S.] to do this,” Cecilia Malmstrom, the European commissioner for trade, said. “I think there is a high probability that they will impose those tariffs, and then we will have to respond.”
Trump has already imposed tariffs on more than $360 billion of products from China, in addition to levies on washing machines, solar panels and steel and aluminum from Japan and Europe. The moves have raised the average American tariff rate to levels not seen in decades.
The WTO panel found that the U.S. had suffered harm equivalent to $7.5 billion a year from discounted European government loans for jets like the Airbus A380, the world’s largest airliner.
“The EU has been found in violation of the law,” Peter Chase, a former American diplomat and a senior fellow at the German Marshall Fund of the United States in Brussels, told the Times. “It simply has no grounds to complain about the United States.”