Trump wins biggest-ever WTO ruling, opening the door for $7.5 billion of tariffs on Europe

trump boeingReuters

  • The World Trade Organization on Wednesday gave the Trump administration the green light to slap roughly $7.5 billion worth of tariffs on goods coming from the European Union.
  • The tariffs come amid a standoff over EU-based Airbus and US-based Boeing that’s stretched on for decades, with each country claiming that the aircraft companies are illicitly aided by government funds.
  • The $7.5 billion worth of tariffs would affect luxury goods such as cheese and linens, as well as aircraft parts coming from the EU — something that would have raised prices for Airbus who manufacture some of its planes in the US. 
  • Shares of Airbus and Boeing slid on the news.
  • View Business Insider’s homepage for more stories.

The World Trade Organization on Wednesday gave the US the go-ahead to slap roughly $7.5 billion worth of tariffs on the EU on aircraft parts and luxury goods. The award is the largest in WTO history, nearly doubling the previous record set in 2002.

The long-awaited ruling comes as Trump had been looking to step up his trade war with the EU, having already hit the trade bloc with 25% tariff on steel and has threatened a $75 billion tariff on autos from Europe.

The tariffs would be the latest escalation in a decades-long standoff over EU-based Airbus and US-based Boeing, with each government claiming that the aircraft companies are illicitly aided by government funds.

President Donald Trump and European Commission President Jean-Claude Juncker have been locked in a broader trade dispute for more than a year, but progress toward a long-term agreement has proven challenging.

In a statement, the WTO said, “the United States may request authorization from the DSB to take countermeasures with respect to the European Union and certain member States, at a level not exceeding, in total, $7,496.623 million annually.”

Airbus traded more than 1% lower on the news, while Boeing dropped 2.5%.

In 2004, the Bush administration accused the EU of illegally subsidizing Airbus with $22 billion worth of cash. Subsequently, the EU accused the US of doing the same, subsidizing Boeing with $23 billion illegally. 

In 2011, the WTO ruled that both companies had been given unlawful assistance from the opposing governments.

The WTO ruling now means that goods such as cheese, linen and swordfish will become more expensive to export to the US, as well as aircraft part prices going up. 

Airbus’ CEO recently said that the trade war between the EU and the US would be a “lose-lose game,” arguing that neither side will benefit from the hikes in tariffs. 

The EU’s own hike in tariffs will be ruled upon by the WTO early next year so it will be a while until the trade bloc can match Trump’s trade war. 

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