EU to protect Airbus in US trade deal as Ferrari set to lose out

As the European Union nears a trade deal with the U.S., its negotiators are focusing on protecting key industries from massive tariffs set to hit the bloc’s exports as soon as Aug. 1. The European Commission, which handles trade matters for the EU, is closing in on a preliminary agreement that would exempt commercial aircraft from some tariffs in a potential boost to Airbus SE, according to people familiar with the matter. It would also create carve-outs for some — mostly German — carmakers, giving relief to companies such as BMW AG and Mercedes-Benz Group AG. Other carmakers such as Italy’s Ferrari NV may miss out on any benefits since the carve-out may only help companies with factories in the U.S., Bloomberg reported earlier. Which sectors are spared — spirits are also expected to receive a reprieve — speaks to the political leverage of key member states, which industries the EU views as critical, as well as areas where the U.S. has a vested interest to protect its own manufacturers. In the case of Airbus, it’s a bit of all of those. “It’s absolutely the banner-waver for European aircraft manufacturing,” John Strickland, an aviation analyst at JLS Consulting, said in an interview. Tariffs being passed on to customers “would potentially have a significant dampening effect on demand and therefore the whole financial success of Airbus,” he said. [caption id="attachment_57290155" align="aligncenter" width="1240"] (Courtesy/Bloomberg)[/caption] More than just the world’s largest maker of commercial jetliners, Airbus assembles its aircraft through a complicated choreography of parts and factories and has become a symbol for industrial cooperation on the continent. Airbus’ main headquarters is in Toulouse in southern France, where it has so-called final assembly lines for its various products, alongside its other main facility in Hamburg. But over the years, the planemaker has expanded its global production presence to include Tianjin in China, Mobile in Alabama and Mirabel in Canada. That’s given Airbus a powerful tool to sell locally made jets to customers in the U.S. and China, the two biggest aviation markets. Boeing, by contrast, only makes its aircraft in the U.S., giving the company no option to adapt its global footprint to potential levies in some markets. The EU made protecting the planemaker a priority. The bloc’s industry chief, Stephane Sejourne, told Bloomberg last month that Airbus can’t be subject to “unfair competition” from Boeing, which is headquartered in Arlington, Virginia, because the European aircraft maker faces an additional 10% tariff. “If we don’t rebalance, we would leave some leading sectors unprotected, so there’s an economic interest in acting like this,” he said. It remains to be seen what kind of upfront tariff exemptions the U.S. will grant the EU for aircraft, aircraft parts and spirits as talks continue this week, said the people, who spoke on the condition of anonymity. At the Paris Air Show last month, the industry’s biggest annual gathering, U.S. Transportation Secretary Sean Duffy said he supports returning to the terms of the 1979 trade agreement that exempted cross-border trade in airplanes and aircraft parts from tariffs. Duffy acknowledged that aviation has generated trade surpluses for the US because of the decades-old pact, telling journalists at a meeting that “we should take aviation off the negotiating table, by going back to 1979, and that only helps us take some tools away from our trading partners where it might be beneficial to us.” The U.S. duties now cover €380 billion ($445 billion), or about 70%, of its exports to the U.S., according to EU estimates. In its last forecast in May, the European Commission significantly revised downward its growth estimate for this year as a result of the trade war, expecting a moderate pick-up of 1.1%, compared with a growth rate of 1.5% as predicted in November. The EU has until Aug. 1 to clinch a preliminary trade deal that would lock in a 10% across-the-board tariff rate while negotiators try to hammer out a permanent agreement. Failure to reach an accord by that date means tariffs on nearly all EU exports to the US will jump to 50%. The bloc is also pushing the US for quotas and exemptions to effectively lower Washington’s 25% tariff on automobiles and car parts as well as its 50% tariff on steel and aluminum, according to the people. But a breakthrough on those levies is not immediately forthcoming. The auto tariffs have added cost and complexity for Europe’s manufacturers, which rely on the lucrative US market for sales of their larger and pricier sport utility vehicles. The situation is especially critical for German firms that are under pressure to protect market share in the US as they fall further behind in China, where local brands led by BYD Co. are taking over. Porsche AG and Mercedes this week reported declining auto sales due to lower deliveries in North America and China. [caption id="attachment_57290156" align="aligncenter" width="1240"] (Courtesy/Bloomberg)[/caption] However, the EU and U.S. are discussing a so-called offsetting mechanism that would allow European companies that make automobiles in the US to export a certain number tariff-free, according to the people. That would benefit companies including BMW, Mercedes and Volkswagen AG’s namesake brand. Porsche and Ferrari don’t operate plants in the US and import all of their cars from Europe. Volkswagen’s Audi is currently weighing starting US production, and in May said it will choose a site this year. Its U.S. top seller, the Q5 SUV, is imported from Mexico. The model’s sales slumped 29% in the second quarter. Mercedes is shifting output of its GLC SUV — its most popular import in the US — to its factory in Alabama by 2027. German Chancellor Friedrich Merz last month backed the idea of an offset rule to provide tariff relief for some European carmakers. But negotiations have become increasingly urgent since then. “We want an agreement with the Americans,” German Finance Minister Lars Klingbeil told lawmakers in Berlin Tuesday. “But the deal must be fair — and if we do not succeed in reaching a fair deal with the US, then the EU will have to take countermeasures to protect our economy.”

EU to protect Airbus in US trade deal as Ferrari set to lose out

Duffy supports exempting cross-border trade in airplanes and aircraft parts from tariffs

Amazon buys first A330-300

Embraer’s E-Freighter: From slow start to strategic revival

Related Posts

IAI A330-300BDSF makes 1st post-conversion flight ahead of certification

777 conversion redeliveries grow to five for year with Challenge’s 2nd 777-300ERSF

EFW CEO Jordi Boto joins Cargo Facts Symposium 2026

Embraer’s E-Freighter: From slow start to strategic revival

Cargo Facts Free Newsletters

Cargo Facts Connect Podcast

Follow Us

Welcome Back!

Retrieve your password