Airbus has issued a warning against an escalation of the dispute over aircraft subsidies between the United States and the European Union, and said proposed tit-for-tat tariffs to be the meeting supply chain and the consumer.
The US and the EU have threatened to impose billions in tariffs on goods, including aircraft, was the last step in a long-standing transatlantic dispute with the World Trade Organisation.
Airbus chief Executive Christian Scherer told CNBC, the proposed rates “defy economic logic” and would harm consumers.
“If that were to happen immediately, retaliation, trade barriers would rise, the price of aircraft would rise, which means that airlines have higher costs, which they then pass on to the consumer, and then everything slows down.”
Talking to CNBC’s Chery Kang on the sidelines of the IATA general meeting, Scherer added that the company’s predominantly American supply chain would be affected by the ripple effect of tariffs.
US President Trump said last month his government would advance with customs duties on goods worth $ 11 billion, with the USTR claiming the European Union’s subsidies to an Airbus would have affected the United States.
Airbus has demanded an end to the long-standing dispute and said that the escalation will create a loss situation for both Airbus and its US competitor Boeing.
“This latest step in our colleagues in America are causes of concern, and not only for Airbus or Airbus, and Boeing, which are in a loser position, when dying happens, but for the entire ecosystem, the entire supply chain, mostly American, and the consumer overall,” said Scherer.
In view of Britain’s imminent exit from the European Union, Scherer said that Airbus could wait for the Brexit, but had its quotas in preparation for changes in customs and regulation.
“What this means is that we have to expect that we might create some buffer stocks, maybe make arrangements to preposition parts, sub-assembly, so that we are not affected by a possible slowdown in goods or passenger traffic.”
Scherer adds that while the Brexit will create a new barrier to trade, it will cost business and its ecosystem higher.