US and EU head for tariffs over aircraft aid, trade chief says

European Union Trade Commissioner Cecilia Malmstrom signaled that she expects the U.S. and EU to hit each other with tariffs as retaliation over illegal government aid to Airbus SE and Boeing Co.

Malmstrom said the U.S. is entitled to strike first by the end of summer and the EU would follow suit five to six months later after the World Trade Organization faulted both sides in 14-year-old disputes over aircraft subsidies. She also repeated a preference to seek a negotiated settlement with Washington.

“We are both sinners, so with that we are entitled to take action against each other,” Malmstrom told a conference on Monday in Brussels. “This would be very unfortunate, of course, because even if we both have sinned we should put our different sanctions in the freezer and say ‘let’s talk.”’

The simmering Boeing-Airbus dispute threatens to worsen transatlantic commercial ties as the EU presses U.S. President Donald Trump’s administration to refrain from imposing tariffs on European automotive goods based on national-security grounds, and to enter negotiations on across-the-board cuts in industrial duties.

The U.S. has threatened to seek $11 billion in damages through duties on European goods ranging from helicopters to cheeses to counter state aid to Airbus. In response, the EU has published a preliminary list of U.S. goods — from ketchup to video-game consoles — being targeted in a $12 billion plan for retaliatory levies over subsidies to Boeing.

“These actions would be WTO-compatible,” Malmstrom said. “They are allowed to do so and so are we. But still, it would be in the interest of everybody” to enter into negotiations and avoid retaliation because “there’s always the ordinary people, ordinary consumers, small companies who are affected.”

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