U.S. and EU suspend 16-year Airbus-Boeing feud, agreeing to work together to counter China

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The United States and the European Union reached a deal to end a 16-year-old dispute over subsidies to Airbus and Boeing, the White House announced on Tuesday.

The state of play: Both sides agreed to suspend tariffs for five years while they work together to counter China's investment in the aircraft sector in ways "that reflect our standards for fair competition," U.S. Trade Representative Katherine Tai told reporters.

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The big picture: The announcement was somewhat expected after the U.S., E.U. and the United Kingdom in March agreed to suspend tariffs, estimated at $11.5 million, for four months, the New York Times reports. It came as President Biden met with EU leaders in Brussels.

What they're saying: "Today’s announcement resolves a long-standing irritant in the U.S.-EU relationship. Instead of fighting with one of our closest allies, we are finally coming together against a common threat," Tai said.

  • "This deal will shore up the longer-term competitiveness and innovation of a key sector — aircraft — that is one of the most important sources of middle-class jobs at home," she added, saying that the new deal would protect around 1.2 million jobs in that sector.

  • Tai also warned that the U.S. had the right to reimpose tariffs if the EU failed to uphold its side of the deal: "These tariffs will remain suspended, so long as E.U. support for Airbus is consistent with the terms of this agreement."

Flashback: "The dispute dates to 2004, when EU authorities said Boeing had received $19 billion in unfair subsidies from federal and state governments. The United States filed a similar claim that year over European subsidies to Airbus," CNN writes.

  • In 2019, the Trump administration imposed tariffs of up to $7.5 billion over some European goods after the World Trade Organization declared that the EU had granted unfair subsidies to Airbus.

  • In response, the EU applied tariffs worth $4 billion on U.S. products after the WTO said the U.S. had also unfairly subsidized Boeing.

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