US imports into Europe face being hit with billions of dollars of tariffs after the World Trade Organisation ruled on the ongoing dispute over illegal subsidies that Airbus claims Boeing received.
The international trade arbiter said illegal state support in the form of subsidies and tax breaks received by Boeing caused Airbus damages of $4bn (£3.1bn) a year in lost sales and market share as the transatlantic tit-for-tat trade battle escalated.
Under the WTO ruling, the European Commission can now impose levies on US goods equal to the value of the damage it ruled has been suffered by Airbus.
Goods that could be hit with tariffs include aircraft made by Boeing - pushing up the cost of US-built planes for European carriers - as well as a wide range of other products.
The Commission has previously released a list of US imports that could be targeted, including helicopters, tractors, bicycle parts, wines, spirits, foods and fish, as well as medical plasters and video games.
The ruling is seen as the final stage in a 16-year battle between Airbus and Boeing being fought by proxy through their governments, with each claiming the other received illegal support to help produce aircraft.
Last year the WTO issued a ruling permitting the US to impose tariffs on $7.5bn of EU goods over state support.
The ongoing battle also threatens to disrupt the $200bn a year commercial aviation market by allowing new entrants such as China to use the dispute as an excuse to funnel state aid to its nascent aerospace sector.
Airbus has repeatedly said it wanted to negotiate a settlement to end the row over subsidies, which is pushing up costs in an aviation industry already struggling due to Covid.
The state of Washington, where Boeing’s main plant is based, is ending some of the tax breaks the US plane-maker received, while Airbus has increased repayments to EU governments on loans it received to help fund the development of aircraft.
Guillaume Faury, chief executive of the European plane-maker, said: “Airbus did not start this WTO dispute, and we do not wish to continue the harm to the customers and suppliers of the aviation industry and to all other sectors impacted.
“We remain prepared and ready to support a negotiation process that leads to a fair settlement. The WTO has now spoken, the EU can implement its countermeasures. It is time to find a solution now so that tariffs can be removed on both sides of the Atlantic.”
However, Boeing took a less conciliatory stance, saying it was “disappointed that Airbus and the EU continue to seek to impose tariffs on US companies and their workers based on a tax provision that has been fully and verifiably repealed”.
The aerospace giant also dismissed the WTO ruling as “effectively irrelevant” saying that its tariffs were only permitted to force compliance. Boeing said because the tax breaks had ended, tariffs the EU might impose were not be permissible under WTO rules.
Boeing added: “Rather than escalating this matter with threats to US businesses and their European customers, Airbus and the EU should be focusing their energies on good-faith efforts to resolve this long-running dispute.”
The issue could stoke up anti-Europe rhetoric in the US ahead of the election, with Donald Trump having been quick to impose tariffs on countries he sees as being willing to support their domestic industries with state aid.