BERLIN — The head of Airbus has delivered a stark warning to U.S. President Donald Trump that tariffs on the European aviation business will backfire by hitting American workers and roiling the supply chains of U.S. airlines.
After 15 years of mutual accusations over unfair subsidies for Europe’s Airbus and America’s Boeing, Washington and the EU now look set to descend into a full-blown tariff war in the coming weeks.
The World Trade Organization on Friday issued a ruling granting Washington the right to claw back between €5 billion and €8 billion in tariffs on a list of EU exports worth some $25 billion, diplomats told POLITICO. The list of Trump’s targets ranges from Airbus jets and parts to European dairy and luxury goods.
Airbus Chief Executive Guillaume Faury retorted, however, that the U.S. could itself face “very negative consequences” if it hits European products. This is because the European and American supply chains are so interwoven.
“At Airbus, 40 percent of commercial aircraft procurement is purchased from the U.S. supply chain,” Faury told POLITICO. “I think it would really not be consistent to apply tariffs on planes that are manufactured in the U.S., to serve the U.S. industry relying, to a very large extent, on the U.S. supply chain. It will be damaging for the supply chain, it will be damaging for the OEMs [original equipment manufacturers], and it will be very damaging for the airlines and for the economies of Europe and the U.S.”
Many American airlines have Airbus aircraft on order, Faury stressed. Those planes contain U.S. parts and are assembled at a plant in Mobile, Alabama.
“We are assembling our A320s as well in Mobile so this will impact as well the workforce in the U.S., which would be absolutely not consistent with what President Trump is trying to push: having companies localizing activities in the U.S.”
The interview with Faury took place on Friday in Berlin, a day before POLITICO reported the WTO had submitted its report allowing the U.S. to impose tariffs on European products.
Boeing boomerang
Faury also stressed that the U.S. risks future retaliation from Europe in a parallel case before the WTO — alleging improper U.S. support for Boeing — when the trade body rules next year.
“We think in the mid-term to long-term Boeing will be more significantly hit than Airbus, given the U.S. versus Europe nature and mix of planes flowing both sides of the Atlantic, but we think basically it will be damaging for everybody,” Faury said.
The EU expects the WTO to issue its decision on subsidies to Boeing early next year and has readied a list of U.S. goods to hit with tariffs. These include planes, chemicals, citrus, ketchup and frozen fish.
Airbus estimates that it suffered between $15 billion and $20 billion worth of harm from the subsidies Boeing received.
“Europe tends to believe — and we believe they are right — that their volume of retaliation will be higher than the one of the U.S.,” Faury said.
Trump has used the Airbus-Boeing cases as fodder in his broader mission to berate the bloc for its trade policies, tweeting in April: “The EU has taken advantage of the U.S. on trade for many years. It will soon stop!”
Asked if the political climate may have had an impact on the WTO decision, Faury said: “I think it’s the case.” He accused the United States Trade Representative, the government body responsible for U.S. trade policy, of using trade as “leverage.”
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