The European Union intends to impose tariffs on $3.9 billion worth of Boeing (NYSE:BA) jets and other U.S. good annually, the latest salvo in a long-running dispute between the U.S. and Europe over aerospace subsidies.
Last month, the EU won World Trade Organization (WTO) authorization for the tariffs, successfully arguing that subsidies provided to Boeing by U.S. federal and state sources gave the company an illegal leg-up on archrival Airbus (OTC:EADSY). The U.S. has already imposed tariffs on certain Airbus imports as part of a package of tariffs on about $7.5 billion worth of European goods.
Image source: Boeing.
After the WTO ruling, Airbus sounded a conciliatory tone, calling for new talks between the two sides to try to remove all tariffs. Nevertheless, while EU Trade Commissioner Valdis Dombrovskis expressed interest in negotiations, he said “we had no other choice but to impose these countermeasures.”
“We have made clear all along that we want to settle this long-running issue,” Dombrovskis said. “We call on the U.S. to agree to both sides dropping existing countermeasures with immediate effect, so we can quickly put this behind us.”
The tariffs include a 15% duty on all Boeing imports, as well as a 25% tariff on certain agricultural products and industrial items. The Boeing goods represent about 44% of the $4 billion in estimated annual sales.
While Airbus and Boeing have waged a vicious war against each other dating back nearly 15 years, both sides need to be careful not to advocate too strongly for the tariffs in public. Ultimately the costs are passed on to their airline customers, and with the pandemic eating into airline revenue those customers can ill-afford higher costs for airplanes right now.
