The United States has warned that a 3.4 billion dollar loan to Airbus could undermine its trade truce with the European Union and put a wider agreement on tariffs at risk.
US Trade Representative Jamieson Greer has demanded details of the loan, which was provided by the European Investment Bank (EIB) in June. He said his office had still not received information about what he described as the bank’s “largest loan ever”.
Greer warned that the financing could breach the terms of the 2021 agreement that suspended a long-running dispute over subsidies to aircraft manufacturers. The truce paused tariffs on roughly 11.5 billion dollars of goods and was extended in July.
“I had sincerely hoped that trade-distorting European subsidies to Airbus were a thing of the past,” Greer said. He accused France, Germany and Spain of having “aggressively supported Airbus” for decades, giving it an unfair advantage over US aerospace workers and businesses.
The dispute comes as Washington and Brussels try to preserve a broader trade agreement reached in July. That deal set tariffs at 15 per cent and included European commitments to invest hundreds of billions of dollars in US projects, including energy and defence.
If the agreement unravels, tariffs could return to 30 per cent, adding to pressure on American businesses and consumers. The European Union could also activate a retaliation package affecting more than 100 billion dollars of US goods.
Marc Busch, a professor of international business diplomacy at Georgetown University, said the Airbus issue was unlikely to be treated as a minor disagreement.
“There’s no way Europe backs away from this one. Airbus is real. It’s not a little sideshow,” he said.
Boeing asked the US government in July to press Airbus for greater transparency over the financing. At the time, there was speculation that the money could be used to develop a new aircraft model.
The EIB and Airbus did not respond to requests for comment contained in the material.
The origins of the Airbus subsidies dispute
The conflict dates back to a 1992 agreement between the US and the EU that allowed governments to subsidise aircraft production. As Airbus deliveries overtook those of its American rivals in the following decade, Washington and Boeing argued that European support breached World Trade Organisation rules.
The US claimed Airbus had received a 200 billion dollar economic benefit from 22 billion dollars in illegal subsidies. The EU filed a counterclaim, alleging that Boeing had benefited from 23 billion dollars in unlawful support through tax breaks and defence contracts.
After years of legal proceedings, the WTO found in 2011 that both manufacturers had received support that was either legally questionable or gave them an unfair advantage. The US and EU were authorised to impose tariffs on each other’s goods, covering 7.5 billion dollars of US imports and 4 billion dollars of European imports.
The 2021 truce effectively ended the 17-year dispute, the longest case ever heard by the WTO. It suspended the retaliatory tariffs while the two sides sought a longer-term settlement.
Busch said Airbus’s importance to the European economy meant Brussels was likely to defend the assistance provided to the company. Airbus employs 135,000 people in Europe and about one-third of its revenue comes directly from the region, he said.
He said the best outcome would be for the EIB to disclose the terms of the loan, demonstrate that it was consistent with previous financing and allow the US trade representative’s office to close the matter.
But if Washington concludes that the loan breaches the aviation agreement, the Trump administration could impose tariffs under Section 301. Such measures could also be authorised by the WTO if the EU were found to have violated the rules governing aircraft subsidies.
“This is a big deal, and the next step will be tremendously important to get right,” Busch said.
