The United States is threatening to impose tariffs on European goods worth billions of dollars, intensifying a long-running dispute over aircraft subsidies.
The United States Trade Representative proposed levies on hundreds of categories of exports on Tuesday in retaliation for the European Union allegedly providing subsidies to Airbus (EADSF).
The goods range from Airbus jets and their components to European staples like wine, cheese and frozen fish.
These exports are worth about $11 billion every year to European countries, roughly equal to the damage the United States believes the subsidies inflicts on Boeing (BA) and the US economy.
“When the EU ends these harmful subsidies, the additional US duties imposed in response can be lifted,” US Trade Representative Lighthizer said in the statement.
The proposed tariffs are subject to public consultation in the United States and arbitration at the World Trade Organization, which is expected to deliver its findings in the summer.
The dispute dates back to 2004, when EU authorities said Boeing received $19 billion in unfair subsidies from federal and state governments between 1989 and 2006. The US government filed a similar claim that year over European subsidies to Airbus.
The World Trade Organization has handed down favorable rulings to both sides, underscoring the complexity of the dispute.
The trade watchdog said last month that the United States had failed to stop giving Boeing illegal tax subsidies in Washington State, but cleared it of other allegations.
It issued a similar ruling last year in the case brought by the United States over Airbus. It said Europe had breached some rules on subsidies, but dismissed other allegations.
The tariff threat issued by the United States on Tuesday risks further escalation.
“Our ultimate goal is to reach an agreement with the EU to end all WTO-inconsistent subsidies to large civil aircraft,” Lighthizer said.
A spokesperson for the European Commission said Tuesday that the bloc could soon launch its own retaliation tied to the Boeing case.
“The EU remains open for discussions with the US, provided these are without preconditions and aim at a fair outcome,” the spokesperson added.
American threats to hit the European Union with tariffs come amid rising trade tensions between the bloc and President Donald Trump’s White House.
Trump is considering whether to impose tariffs of up to 25% on European vehicle imports, a threat that has unnerved automakers in the industrial powerhouse of Germany.
The US has already imposed tariffs on European steel and aluminum exports.
The European Union retaliated with tariffs on more than $3 billion worth of American exports in June. The levies hit products such as motorcycles, orange juice, bourbon, peanut butter, cigarettes and denim.
The trading relationship between the two sides is worth more than $1 trillion annually, but Europe exports significantly more goods to the United States than the other way around.
EU economies are already under pressure and new tariffs could further dent growth.
The European Commission in February slashed its growth forecast for the bloc this year to just 1.5%. It cited “increased uncertainty regarding trade policies” as one reason for the downgrade.