Trade

Airbus warns Trump hes shooting himself with a tariff war

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 Europes Airbus and Americas 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 Trumps 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.”

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.

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.

A aircraft maintenance technician works on the engine of an Airbus airplane of the airline company Air France in a maintenance facility at Roissy-Charles de Gaulle Airport on June 27, 2019 | Joel Saget/AFP via Getty Images

“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.

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