A $3.4 billion loan could break tariff truce: EU’s record Airbus funding reignites 17-year dispute between aviation giants, Fortune

Loan Raises Trade Deal Concerns

Jamieson Greer, the U.S. trade representative, said his office has not received details about the European Investment Bank’s $3.4 billion loan to Airbus, made in June. In an Oct. 26 statement, he called it the bank’s “largest loan ever” and said it could breach the 2021 aircraft-subsidy truce.

The truce paused tariffs on roughly $11.5 billion in goods and was extended in July. Greer’s warning puts that arrangement, as well as the broader U.S.-EU trade deal, at risk.

The July deal set tariffs at 15% and included European commitments to invest hundreds of billions of dollars in U.S. projects, including energy and defense. If the agreement unravels, tariffs could return to 30%; the EU could also activate a retaliation package affecting more than $100 billion in U.S. goods.

Boeing Sought More Transparency

Boeing asked the U.S. government in July to press Airbus for information about the loan, Reuters first reported. At the time, there was speculation that Airbus might use the money to develop a new jet model.

Greer said he had hoped European subsidies to Airbus were over, and accused France, Germany and Spain of supporting the company to gain an advantage over U.S. aerospace workers and businesses.

Marc Busch, a Georgetown University professor of international business diplomacy, told Fortune that Airbus is central to Europe’s aviation industry, not a minor issue. He said the company provides 135,000 European jobs and gets about one-third of its revenue from Europe, making a quick EU defense of government assistance likely.

A Dispute Dating to 1992

The subsidy conflict began with a 1992 U.S.-EU agreement permitting government support for aircraft production. After Airbus deliveries overtook those of U.S. rivals, Boeing and the United States argued that European support breached World Trade Organization rules.

In 2011, the WTO found that both manufacturers had received subsidies that were legally questionable or gave them an advantage. The U.S. and EU then imposed authorized tariffs on $7.5 billion and $4 billion of goods, respectively.

Next Steps Could Shape Tensions

The 2021 truce paused the 17-year dispute, described as the longest the WTO had heard, and the arrangement was extended in July. Busch said reopening the conflict could strain relations across the Atlantic.

One possible resolution, Busch said, would be for the EIB to disclose its records and show that the loan resembles earlier loans, allowing the U.S. trade representative’s office to drop the matter. He described the next step as important.