Escalating trade dispute puts Boeing at risk of retaliatory tariffs

There are new worries about Boeing, this time over the expectation of retaliatory tariffs in an escalating trade dispute between the United States and Europe.

In a long dispute over European government subsidies to Airbus that hurt Boeing, the World Trade Organization ruled the U.S. can impose tariffs on $7.5 billion worth of all kinds of European goods.

The Trump administration says they'll start in two weeks, with a 10 percent tariff on planes and a 25 percent tariff on other goods.

On Twitter President Donald Trump wrote the European Union "has for many years treated the USA very badly on trade."

Trump called the ruling "a nice victory."

"This really is not good for Boeing. I know they like to think it is, they can declare a big victory and all that," said aviation industry consultant Scott Hamilton.

That's because the Europeans could hit back with tariffs of their own.

"This is a move that will first and foremost hit U.S. consumers and companies," said Daniel Rosario, a spokesperson for the European Union.

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If airlines pay more for planes, they could raise ticket prices.

"The timing of this really couldn't be worse for Boeing," Hamilton said.

He says because of the 737 MAX grounding, Boeing has a backlog of about 900 planes bound for European airlines.

"Those are all going to be subject to tariffs if the EU retaliates," Hamilton said.

In June at the Paris Air Show, the parent company of British Airways announced a preliminary deal to buy MAX planes.

Hamilton predicts if tariffs are imposed, the airline might insist in the final agreement that Boeing cover the cost.

Boeing's company statement focused entirely on Airbus not complying with WTO rulings and did not address retaliatory tariffs.

"Europe is facing tariffs today because Airbus has refused for years to comply with WTO rulings," the statement said. "Yet even today, Airbus could still completely avoid these tariffs by coming into full compliance with its obligations. 
We hope it will finally do that."

Hamilton said the Europeans can retaliate anytime because of previous trade rulings in their favor.

Airbus' own case in the WTO against U.S. subsidies to Boeing could bring another opportunity for tariffs in about six months.

Cox Media Group