USTR Greer Says EU's $3.4 Billion Airbus Loan Threatens Aircraft Tariff Truce

U.S. Trade Representative Jamieson Greer put the European Union on notice Monday, Oct. 26: a loan to Airbus could wreck the truce that ended the longest-running dispute in WTO history.

The loan is €3 billion, roughly $3.4 billion, from the European Investment Bank, the EU's lending arm. The EIB announced it June 29. Greer says that four months later, his office still has no details about it.

What Greer said

In a statement, Greer cited "ongoing requests" for information that have gone unanswered. He described the financing as the bank's "largest loan ever."

"This situation injects substantial uncertainty into transatlantic trade in the aerospace sector," Greer said. He called for a quick resolution "to ensure market-driven production in the aerospace sector and to avoid violation of the terms of our hard-won LCA deal."

He did not say the EU has violated the deal. He said the lack of information puts it at risk.

Greer also went after Airbus's government backers. "I had sincerely hoped that trade-distorting European subsidies to Airbus were a thing of the past," he said. In his telling, France, Germany and Spain have "aggressively supported" their national champion for decades at the expense of U.S. aerospace workers.

The truce at stake

The U.S. and EU spent 17 years fighting at the WTO over alleged aircraft subsidies. Both sides won partial victories and both imposed tariffs under WTO authorizations from 2019 and 2020.

In 2021 they agreed to pause those duties on some $11.5 billion in trade. Greer says the deal rested on a mutual commitment to finance large civil aircraft makers on market terms. The pause was suspended first for four months in March 2021, then extended for five years that July.

The European Commission extended it again this July, citing the U.S. decision not to reimpose countermeasures. That came after the European Parliament approved the broader trade deal, which removed tariffs on U.S. industrial goods in exchange for a 15% U.S. tariff on most EU goods. President Trump had threatened higher tariffs unless EU member states ratified the deal by a July 4 deadline.

So the aircraft truce and the wider tariff arrangement are now tied together. Fortune reports that a collapse could mean a return to a 30% tariff rate and could trigger the EU's retaliation package, which would hit more than $100 billion of U.S. goods.

Airbus and the EIB push back

Airbus says nothing here is unusual. A company spokesman called the loan "a standard corporate financing facility, similar to commercially-available loans we've signed in the past." He said Airbus is "actively engaging with the relevant authorities and are happy to share more information about the loan with governments."

The company also said the loan diversifies its funding sources, which it called necessary to manage a high-value global production system and supply chain. Chief Financial Officer Thomas Toepfer told reporters in London in July the loan was taken out "completely at market level."

The EIB made the same case in July. "This is a normal loan, carrying interest, part of the EIB's overall financing activity," a spokesperson said, adding that the bank finances thousands of companies every year. The bank says the money is meant to support long-term research, development and innovation in commercial aviation, security and defence. It has said an initial €1 billion was signed as part of the larger envelope.

The open question: is it a subsidy?

The issue for Greer's office is whether the loan's terms amount to a subsidy. The WTO has found such loans to be subsidies in the past. Interest rate, repayment schedule and any state guarantees would decide it, and those are the terms USTR says it has not seen.

Boeing asked the U.S. government in July to press for transparency. There was speculation at the time that Airbus would use the cash to develop a new jet. Neither Airbus nor the EIB has said what specific projects the money will fund beyond the general research description.

Boeing did not immediately respond to a request for comment on Greer's statement. The EIB and Airbus did not respond to Fortune's requests for comment.

Why Brussels is unlikely to bend

Marc Busch, a professor of international business diplomacy at Georgetown University, told Fortune that Europe will not back away. "Airbus is real. It's not a little sideshow," he said.

Busch pointed out that Airbus provides 135,000 European jobs and that about a third of its revenue comes from Europe. He said the EU will likely defend the support quickly. "This is a big deal, and the next step will be tremendously important to get right," he said.

No deadline for a response has been announced. Airbus has said it will share information with governments. If the loan documents come out, they will answer the question both sides are now arguing over: whether this was a market-rate corporate loan or the sort of financing the 2021 deal was meant to end.