UK tariff decision plunges Airbus into new trade dispute.

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5 years ago

Britain’s decision to suspend tariffs on Boeing aircraft and other U.S. products has stunned aircraft manufacturer Airbus’ European rival and exposes a growing divide between the U.K. and Europe in aerospace investment, according to industry sources and analysts.

Britain said Tuesday it would suspend tariffs on Jan. 1, describing the move as an attempt to reduce a long-running dispute over aircraft subsidies that has dragged the United States and Europe into an “eye-for-an-eye” tariff war, Reuters reported.

The decision comes amid broad trade talks between Britain and the United States and ends a united front on tariffs between Airbus’ political supporters, Britain, France, Germany and Spain.

Airbus downplayed the measure, saying the company’s goal remains “to find a negotiated solution to this long-running dispute to avoid the loss of tariffs.

In private, several European business sources said that the UK’s surprising move threatened the most serious cross-Channel split in the aerospace sector in decades. Two of the sources said that in other capitals it was considered a “betrayal” of Airbus, which has 14,000 employees in the UK.

Paul Everitt, head of the British aerospace lobby group ADS, said Britain had acted unilaterally without reciprocal action from the United States.

The dispute over subsidies is the biggest case ever handled by the World Trade Organization and comes to a head just as Britain is leaving the European Union, forcing it to seek new trade agreements.

By Tim Hepher, William James.