The World Trade Organization ruled on Tuesday the European Union had ignored requests to halt all subsidies to plane maker Airbus, prompting the United States to threaten sanctions against European products unless the EU stops "harming USA interests".
Today's decision ends the dispute and clears the way for the United States Trade Representative (USTR) to seek remedies in the form of tariffs against European imports to the United States.
The WTO dismissed an appeal by Airbus saying, the European plane maker had failed to fix the harm done to Boeing.
"Today the WTO Appellate Body, the highest WTO court, has definitively rejected the USA challenge on the bulk of European Union support to Airbus, and agreed that the European Union has largely complied with its original findings", said Cecilia Malmstrom, the EU's trade commissioner.
The decision could further ramp up tensions between the US and Europe, which have been stoked by President TrumpDonald John TrumpAvenatti defends right to release Cohen's financial info Pruitt's 24/7 security requested over fears of Trump policy backlash Senate GOP anger over McCain insult grows MORE's criticism of EU trade policies, his refusal to provide a permanent exemption for tariffs on European steel and aluminum imports and last week's decision to leave the Iran nuclear deal. WTO rules allow it to target any industry since all goods fall into one category.
It said in a statement that, "This is expected to be the largest-ever WTO authorization of retaliatory tariffs". It said it would comply swiftly on the rest.
Boeing predicted such tariffs could reach billions of dollars a year starting as early as 2019.
Later this year the WTO will issue a final ruling on a challenge from the European Union that the USA provided billions of dollars of aid to Boeing.
The CEO of Airbus, Tom Enders said, "Today's report is really only half the story".
The WTO case has yielded 5,000 pages of filings and cost tens of millions of dollars.
The authorized tariffs are likely to total billions in duties per year, unless and until Airbus addresses the illegal subsidies it received from European governments for its most recently launched airplanes.
"The result is simple: Airbus pays back its loans, Boeing pays back nothing and continues to exploit the generosity of the USA taxpayer", he said. It has meanwhile levelled significant subsidy claims against Boeing. For a claim to stick at the WTO, subsidies must be found not just to exist but to have caused real harm.
"Companies should not have to compete with governments - that is what this case is about", said Robert Novick, co-managing partner at Boeing's trade lawyers WilmerHale.