Washington announced it would put a 10 percent tariff on large civil aircraft imported from the four European partners of Airbus - Germany, France, Spain and the United Kingdom - after Wednesday's World Trade Organization (WTO) decision that ruled the company received undue subsidies.
Hours after getting the green light from the World Trade Organisation (WTO), Washington moved on Wednesday to retaliate against the EU over illegal subsidies for Airbus, announcing tariffs on $7.5 billion worth of European goods starting on October 18. The penalty is the highest ever granted by a WTO arbitrator. That has led to speculation that a trade war would likely cause Trump's administration to levy a tariff on autos - something he has threatened to do in the past.
Effective on October 18, the USA will slap a 10% tariff on large commercial aircraft and a 25% tariff on other agrigultural and industrial goods imported from the EU.
After earning a series of victories in that equally epic case, Brussels asked a WTO arbitrator to give it permissions to slap retaliatory tariffs on $12 billion in U.S. goods.
The becoming battle over Boeing and Airbus subsidies began in 2004.
With its Brexit deadline less than a month away, Britain said in a statement that "it should not be subject" to any sanctions Washington imposes on the European Union and that it was seeking confirmation from the WTO that it was fully compliant will all rulings related to Airbus.
Once the final list is published by the US Administration, a process that could take 24 to 48 hours, the WTO's dispute settlement body will need to validate the decision.
A senior USTR official who briefed reporters October 2 said that the Trump administration has the authority to periodically revise the retaliatory targets and tariff rates.
His German counterpart Olaf Scholz told the mass-circulation Bild newspaper the past few months had shown that trade conflicts helped no one, adding, 'Therefore we will react to the new situation in a determined but considered way'.
"Our hand is extended", French Finance Minister Bruno Le Maire said.
Shen Haijun, a professor with the School of Aerospace Engineering and Applied Mechanics at Tongji University, told China Business Network: "The European Union suggested a negotiated settlement of disputes between the EU and the U.S., so that they may together face competition from the aviation industries of other countries".
The United States brought the European Union before the WTO in 2004, accusing Britain, France, Germany and Spain of giving illegal subsidies and grants to Airbus, making its commercial jets much cheaper on the global market than its U.S. rival Boeing.
White House assistant for trade and manufacturing Peter Navarro discusses the WTO ruling, the market drop and the USMCA.
The value of exports to the U.S. grew to £1 billion previous year from £280 million in 1994. "It's an unnecessary strain at a time of slowing global economic growth", Felbermayr said.
The EU would prefer an amicable settlement in this 15-year-old dispute and the development of new common rules on government support for aviation companies.
The mutual imposition of sanctions, observers say, is counterproductive and damaging to both economies, which are closely integrated. The two sides account for about half of the world economy.
Cato Institute trade policy expert Simon Lester wrote in a commentary on the think-tank's website: "The ideal outcome would be that both sides will remove, or at least rein in, their aircraft subsidies, and I hope that these tariff authorisations move us in that direction".
Total U.S. investment in the European Union, for example, is three times higher than in all of Asia.