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WTO Approves Anti-Boeing Tariff in Response to U.S. Subsidies

By Lou Whiteman - Updated Oct 13, 2020 at 1:11PM

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Boeing is dealt a blow on the same day the company announces 51 order cancellations in September.

The World Trade Organization (WTO) has given the European Union the green light to impose tariffs on $4 billion worth of U.S. goods, part of the 15-year-old dispute between the U.S. and Europe over subsidies provided to Boeing (BA 0.38%) and Airbus (EADSY 0.82%).

Airbus, backed by European lawmakers, has long argued that subsidies provided to Boeing by U.S. federal and state sources violate WTO rules. The WTO has largely agreed, determining in a ruling on Tuesday that subsidies to Boeing have cost Airbus $4 billion in lost sales and market share annually.

The U.S. has already imposed tariffs on certain EU imports as part of the squabble.

A Boeing 737-900 in flight.

Image source: Boeing.

The EU Commission came up with a list of countermeasures in anticipation of the ruling, including tariffs on Boeing aircraft. Lawmakers in France are pushing the EU to move ahead with retaliation. In a statement to reporters, French finance minister Bruno Le Maire and trade minister Franck Riester said that "in the absence of a negotiated solution and as long as unjustified American sanctions are maintained, the European Union should exercise its right to sanctions."

Airbus sounded a more conciliatory tone, calling for new talks between the U.S. and the European Union to remove tariffs against both sides.

"Airbus did not start this WTO dispute, and we do not wish to continue the harm to the customers and suppliers of the aviation industry and to all other sectors impacted," CEO Guillaume Faury said in a statement. "As we have already demonstrated, we remain prepared and ready to support a negotiation process that leads to a fair settlement."

The tariff talk comes as both Boeing and Airbus are struggling because of the coronavirus pandemic, which has slashed travel demand and caused airlines to scale back growth plans.

Boeing today said it recorded 51 order cancellations in September, all 737 models, lowering its year-to-date net orders to 983 planes. That trend is unlikely to reverse anytime soon, as Delta Air Lines on Tuesday said it could take two years or more for airline revenue trends to normalize.

Lou Whiteman owns shares of Delta Air Lines. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy.

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