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Record U.S. Tariff Award On Airbus Service Could Affect Trade Tensions

This week Transatlantic trade ties face renewed disruption when global arbiters are anticipated to grant the U.S. a record award permitting it to hit European imports with billions of dollars of tariffs in a long-running aircraft subsidy dispute.

The World Trade Organization has discovered that both European planemaker company Airbus and its U.S. Boeing got billions of dollars of illegal subsidies in a pair of cases that have run for 15 years.

Each side has threatened tariffs after the Geneva body found neither adhered totally to its findings. However, the U.S. has a head start, with the European Union having to wait till early in 2020 to listen to what level of retaliation it could exact over Boeing.

The WTO is anticipated this week to reveal the quantity of E.U. goods the U.S. can target. People familiar with the case said the three-person tribunal is anticipated to award it around $7.5 billion, a record for the 24-year-old watchdog.

The WTO rarely grants such retaliation rights most parties reach settlements, and in many cases, complainants don’t exercise their rights. The U.S., although it has indicated it can target E.U. goods to the fullest extent.

The WTO award in the world’s most significant corporate trade dispute may fuel already strained trade tensions, diplomats say.

Trade talks between the two, designed to ease tensions and push back the threat of a tit-for-tat tariff war, haven’t gone well. The two sides have made some growth on regulatory cooperation; however, a proposed deal to reduce duties is stuck, with Washington saying agriculture must be included and Brussels insisting it cannot.

The Trump administration has concluded that tariffs had been efficient in bringing China to the negotiating desk over commerce, and in convincing Japan to open its agricultural market to U.S. merchandise. Washington is unlikely to skip the chance to implement tariffs within the case over aircraft subsidies, based on current and former U.S. officials.

Airbus has stated this might result in a ‘lose-lose’ trade war.

Some U.S. airlines have urged the administration not to go ahead with the tariffs, saying they could result in layoffs.