1. What’s the fight about?
State aid, the increasingly common practice of governments doling out support to key manufacturers or industries. In 2004 the U.S. lodged a WTO legal case against the EU for its member state support to Airbus. In 2011 the WTO ruled that the EU provided Airbus with billions of dollars of illegal subsidized financing that enabled Airbus to launch its widebodied and short-haul planes. The EU opened a parallel case against the U.S. that argued Boeing benefited from state subsidies as well as space and military contracts, which defrayed the cost of civilian aircraft development. In 2012 the WTO determined Boeing had received at least $5.3 billion in illegal U.S. aid. The cases continued to wind their way through the WTO dispute process until 2019, when the WTO authorized the U.S. to retaliate with tariffs against $7.5 billion worth of EU exports. In October 2020 the EU won WTO permission to hit back with tariffs on $4 billion of American goods.
2. Why is this flaring up now?
The U.S. is stepping up pressure on Germany and France with extra tariffs on some of their goods, a move designed to squeeze the 27-nation bloc into settling the dispute. The EU has drawn up its own list of American products to hit with levies, and may target politically important industries for U.S. President Donald Trump and his Republican allies including aircraft, coal, farm products and seafood. In 2019, the WTO said the U.S. continued to provide illegal subsidies to Boeing via a Washington state preferential tax scheme that disadvantaged Airbus. The U.S. subsequently said it complied with the ruling after