If the United States Trade Representative (USTR) chooses to impose tariffs on the importation of aircraft and/or aircraft components, this will create insecurity and disruption not only to the aerospace industry, but also to the broader global economy. Yet it is still avoidable.
Airbus CEO Guillaume Faury stated: “Airbus will continue working with its US partners, customers and suppliers, to address all potential consequences of such tariffs that would be a barrier against free trade and would have a negative impact on not only the US airlines but also US jobs, suppliers, and air travelers. Airbus is therefore hopeful that the US and the EU will agree to find a negotiated solution before creating serious damage to the aviation industry as well as to trade relations and the global economy.”
In the coming months, the WTO will determine the amount of tariff countermeasures the EU can impose on US products – including imported Boeing aircraft – in the parallel counter case regarding illegal subsidies to Boeing. The WTO has already found that the US failed to address illegal subsidies causing harm to Airbus. This will provide the EU with grounds to claim countermeasures on US products at a level that could exceed US sanctions.
If applied, these tariffs on both sides will severely impact US and EU industries, putting high costs on the acquisition of new aircraft for both US and EU airlines. Aviation is a global industry. Evidence of that is the fact that close to 40 percent of Airbus’ aircraft-related procurement comes from US aerospace suppliers. This US supply chain supports 275,000 American jobs in 40 states through spending that has totaled $50 billion in the last three years alone. If tariffs are applied, the entire global industry will be harmed.
The only way to prevent the negative effects of these tariff would be for the US and EU to find a resolution to this long-running dispute through a negotiated settlement. Airbus continues to encourage the US Administration and the European Commission to find a settlement to this dispute, and thereby preserve the free, fair competition and open trade that have proven beneficial to the public and essential for a successful and growing global aviation industry.
For more details on the WTO dispute, please refer here and to the Airbus Financial Statements (in particular, note 23, “Litigation and Claims” of the Unaudited Condensed Interim Financial Information of Airbus SE for the six-month period ended 30 June 2019 available on Airbus’ website).