Trade War Fears: Boeing Could Be Hit By EU Tariffs

The Boeing-Airbus subsidy spat has reached a new peak, as both aircraft manufacturers stand to lose out if currently proposed tariffs are agreed. Just yesterday, EU regulators produced an 11 page list of items which could be taxed up to 100%, including civil aircraft.

Airbus and Boeing
The Boeing-Airbus subsidies dispute has been going on for almost 15 years. Photo: Wikimedia

Recent proposals from European regulators have included civil aircraft and helicopters among those goods which could see huge import tariffs applied. Following the US government’s plans to introduce tariffs on Airbus imports, the EU’s countermeasures have been targeted to hurt Boeing badly.

Specifically, under CN code number 88024000, the EU are proposing tariffs on “aeroplanes and other powered aircraft of an of an unladen weight > 15.000 kg (excl. helicopters and dirigibles)”. This will only apply to new non-military aircraft.

The proposed increased customs duty could be as much as 100%, making difficulties for Boeing when it comes to selling aircraft in to European carriers. The tariff proposals have come about in response to the ongoing battle to protect Boeing and Airbus.

A 15 year battle

The US and the EU have been locked in a trade war for almost 15 years now. Recently, tensions have been cranked up with both sides threatening billions of dollars of import tariffs on goods from the other side.

The current proposed tariffs are in response to ‘harm’ that they say their home grown aerospace companies are suffering due to subsidies from their states. Airbus claims that Boeing has received billions in tax breaks as well as benefits from defense and NASA contracts. On  the other side of the pond, Boeing say Airbus has been supported through loans from the government to finance new aircraft.

Airbus boeing
Both sides accuse the other of receiving illegal state subsidies. Photo: Wikimedia

Over the years the claims have been working their way through the World Trade Organization (WTO), the two sides have been back and forth offering up measures and countermeasures in a relentless tit-for-tat. Just last year, the US introduced levies on steel and aluminum imports, which served to further inflame the EU.

A recent ruling by the WTO suggests that they agree that the US continues to subsidize Boeing illegally, and that it is causing significant harm to Airbus. EU Trade Commissioner Cecilia Malmström, said,

“European companies must be able to compete on fair and equal terms. The recent WTO ruling on US subsidies for Boeing is important in this respect. We must continue to defend a level-playing field for our industry,”

The Trump administration has countered by proposing their own set of sanctions on EU produce and has launched its own case claiming $11bn in damages.

Increased subsidies could make it hard for Airbus to sell their A220 in the US. Photo: Wikimedia

The tariff list

The European Union has now targeted $20bn of US imports for trade tariffs, in retaliation for last year’s aluminum and steel levies as well as the ongoing Airbus / Boeing issue. Aside of aircraft, the list runs to no less than 11 pages, and includes all manner of random items, from tobacco to paper plates, video games to live fish.

If the EU proposals go through, the 777X could have a tough time in Europe. Photo: Wikimedia

This latest development comes a week after the US proposed a similar level of tariffs on EU imports. Mr. Trump’s list ran to a massive 14 pages and ranged from wine and cheese to diggers and bikes. Similar to the EU list, the US list was also heavily focused on aircraft, meaning both Boeing and Airbus could end up losing out.

The current EU proposals are under consultation until the end of May.