Airbus is disputing President Donald Trump’s threat to impose tariffs on $11 billion worth of European imports, calling the move “unjustified” and warning it could trigger a wider trade fight with consequences for the company’s growing manufacturing operation in Mobile.
Trump announced the threat in a Tuesday morning tweet, citing a World Trade Organization finding that European government subsidies to Airbus had adversely affected the United States and Boeing, the Chicago-based aerospace giant that competes directly with Airbus for global airline orders. “The World Trade Organization finds that the European Union subsidies to Airbus has adversely impacted the United States, which will now put Tariffs on $11 Billion of EU products,” Trump wrote, adding that “the EU has taken advantage of the U.S. on trade for many years. It will soon stop!”
The dispute between Airbus and Boeing dates back to 2004, when the United States first filed a complaint with the WTO alleging Europe was illegally subsidizing Airbus. Europe countered with its own case accusing Washington of improperly subsidizing Boeing. The WTO has since ruled that both companies received subsidies that violated international trade rules, but regulators have not yet finished calculating how much economic damage each side caused the other, a step that would determine the scale of any tariffs allowed under WTO rules.
In a written statement, Airbus spokeswoman Kristi Tucker pushed back hard on the idea that her company was the one out of compliance. “Airbus has taken all necessary measures to comply with the relatively minor elements highlighted by the WTO in May 2018, which, even then, were less than six percent of all of Boeing’s subsidy claims, regarding alleged aid to Airbus,” Tucker said. “By contrast, Boeing has not shown any willingness to comply with the March 28, 2019, WTO decision regarding the massive subsidies received by Boeing that are clearly in contravention of WTO rules.”
Tucker warned that if the Trump administration follows through on new tariffs, it would only escalate the standoff, giving “the EU an opening to proceed with far larger countermeasures against the U.S.” and stoking “unnecessary trade tensions” between two of the world’s largest trading partners.
The tariff threat lands at a sensitive moment for both companies. Airbus has been expanding rapidly at Brookley Aeroplex in Mobile, where it assembles A320-family jets and, more recently, the A220, formerly the Bombardier CSeries. The Mobile operation depends heavily on components and materials shipped in from Airbus facilities in Europe, meaning new tariffs on EU goods could directly raise costs for the local plant even though the jets themselves are built on American soil by American workers.
That local exposure is what has South Alabama’s congressional delegation on alert. U.S. Sen. Doug Jones, D-Alabama, told reporters on a conference call Thursday that he was “very concerned” after seeing the president’s tweets, arguing that even threatened tariffs that never take effect can rattle businesses that plan investments years in advance. Jones said trade policy shouldn’t be conducted through social media, adding that the administration “seems to not have a coherent strategy” on international trade.
“The Airbus facility in Mobile is a huge economic driver down in South Alabama, and this is going to cause, I think, serious problems,” Jones said. “Everyone wants fair trade deals and wants to see America get a fair deal, but the way the president has gone about it is just wrong.”
U.S. Rep. Bradley Byrne, R-Mobile, who is currently running for U.S. Senate, took a more measured tone Friday, rejecting suggestions that the administration’s tariff threat was motivated by any desire to help Boeing at Airbus’s expense. Byrne noted that Boeing is dealing with its own serious problems following the grounding of its 737 MAX fleet after two crashes, in Indonesia and Ethiopia, killed 338 people combined in less than five months. Aviation regulators in more than 40 countries grounded the jet before the FAA followed suit, and Trump ultimately announced the U.S. grounding decision himself.
“Obviously, Boeing has a major issue on its hands with this aircraft that’s not performed appropriately,” Byrne said. “They need to fix that, and they appear to be doing what they’re supposed to, but I don’t think that has anything to do with the substance of the negotiations between the United States and Europe.”
Byrne, echoing Trump’s rhetoric, said European nations had “taken advantage of us” on trade, but voiced confidence a broader agreement could ultimately serve both countries’ interests. He pointed to Airbus’s importance to his district, where the company is projected to employ more than 1,000 workers by 2021, saying his office has already raised concerns directly with the White House and the U.S. Department of Commerce on the company’s behalf. “We’re engaged in discussion with both about that, and I believe it will work out well for Airbus,” Byrne said.
Business leaders in Mobile are also watching the situation closely. Bill Sisson, president and CEO of the Mobile Area Chamber of Commerce, said the organization has long supported trade policy that is “free, open, but fair,” while stopping short of weighing in on any specific proposal in what he described as an “evolving” negotiation.
“We’re always concerned about tariffs. That can, in some situations, affect the local economy, and any sort of trade war can certainly affect trade at our port as well,” Sisson said. “We’re always very cognizant of these things, but we’re monitoring this at this point.”
The Port of Mobile, along with the Airbus final assembly line, has become one of the region’s most closely watched economic assets in recent years as the aerospace giant has continued to invest in South Alabama. Local officials say any prolonged trade dispute that raises costs on European-made aircraft components could complicate that growth, even as both the Trump administration and European trade officials say they are working toward a broader resolution.
No new tariffs had formally taken effect as of Friday, and it remained unclear when, or whether, the Trump administration would move forward with the $11 billion action floated earlier in the week. Trade officials on both sides of the Atlantic have continued negotiations aimed at avoiding a wider trade war that could ensnare a range of industries far beyond aerospace.