European stocks edge lower as threat of United States tariffs hits Airbus, suppliers

US Prepares to Impose More Tariffs on EU Goods in Response to Airbus Subsidies

US Prepares to Impose More Tariffs on EU Goods in Response to Airbus Subsidies

Washington is seeking to retaliate for more than $11 billion worth of European Union subsidies to Airbus that the World Trade Organization has found cause "adverse effects" for the United States.

The proposed tariffs are subject to public consultation in the United States and arbitration at the World Trade Organization, which is expected to deliver its findings in the summer.

The US says the WTO has repeatedly found that EU subsidies to European aircraft maker Airbus have caused "adverse effects" to the US, chiefly to Boeing, the American plane manufacturer.

The threat from Washington came amid a fragile truce between the European Union and the US after President Donald Trump angered Europe past year by slapping duties on steel and aluminum imports and threatening new ones on cars.

"It will soon stop!" he wrote.

Washington's row with Brussels over subsidies to Airbus, a long-time competitor to USA aerospace giant Boeing, dates back to 2004, when the United States first appealed to the World Trade Organisation for arbitration.

The administration estimates that Airbus subsidies are costing USA companies $11 billion a year in lost market share.

Jennifer Hillman, a former USA trade official who also served on the WTO's appellate body, said the US government typically would announce the target list quietly, perhaps through a notice in the Federal Register.

According to the World Trade Organization, both companies have been the beneficiaries of unfair government subsidies.

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"The EU remains open for discussions with the USA, provided these are without preconditions and aim at a fair outcome", the spokesperson added. In May previous year, the USA cited national security grounds when it slapped a 25 per cent tariff on steel imports and a 10 per cent tariff on aluminium imports from a number of countries, including European Union states.

"The interest of the United States as the interest of the European continent and France is to reach an amicable agreement", said French Minister of the Economy Bruno Le Maire. Airbus suppliers such as Safran SA and Leonardo SpA also closed lower.

Analysts were divided over whether the ramped-up dispute would lead to greater global trade issues.

Germany is particularly apprehensive of possible USA tariffs on auto imports.

It issued a similar ruling a year ago in the case brought by the United States over Airbus.

The USTR said Monday that once that report is issued, it will announce a full product list, which comes after months of trade tensions between the US and the EU.

The US is now negotiating a trade deal with China, but tit-for-tat tariffs imposed by the two countries have already weighed on the global economy this year.

The proposed measures are relatively minor compared with the U.S.'s ongoing trade war with China, in which the two sides have imposed tariffs on about $360 billion of each other's goods in the past nine months.

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