Boeing Co (BA) - Get Report shares slipped lower Thursday as EU officials vowed to retaliate against planned U.S. tariffs on Airbus SE (EADSY) after the World Trade Organization ruled the France-based planemaker had received unfair subsidies from Brussels.
France's finance Minister, Bruno Le Maire, said the EU would respond to Washington's plans to slap a 10% tariff on European-made Airbus planes, as well as steeper levies of 25% on various other goods imported from the Continent. The comments suggested possible reprisals against Boeing, whom the WTO has also said received unfair support, in the form of tax breaks from the state of Washington, and will offer tariff-focused remedies early next year.
"If the American administration rejects the hand that has been held out by France and the European Union, we are preparing ourselves to react with sanctions," Le Maire told reporters Thursday.
Boeing shares were marked 0.1% lower at the start of trading Thursday to change hands at $367.22 each. The move contrasted a sharp 4.5% gain for Airbus, which benefited from an exemption from the U.S. Trade Representative on unfinished airplane parts, some of which are assembled in Mobile, Alabama.
The U.S. Trade Representative said it will slap tariffs of 10% on imported plane made by the Boeing rival, adding it it was apply a 25% levy other European made goods, including British whiskey and French wines.
"For years, Europe has been providing massive subsidies to Airbus that have seriously injured the U.S. aerospace industry and our workers," USTR head Robert Lighthizer said in a statement. "Finally, after 15 years of litigation, the WTO has confirmed that the United States is entitled to impose countermeasures in response to the EU's illegal subsidies."
Boeing shares were also pressured by a Seattle Times report that Boeing pressured the Federal Aviation Administration to ease safety standards for its troubled 737 MAX aircraft in 2014, and a New York Times article suggesting a Boeing engineer had filed an internal complaint after the company rejected safety measures in favor of cost controls.
The reports followed moves by the company to strengthen its safety procedures earlier this week as it races to bring the grounded 737 MAX back into service, with FAA approval, and attempts to win back confidence in the aircraft following fatal crashes in Ethiopia and Indonesia.
"Safety is at the core of who we are at Boeing, and the recent 737 MAX accidents will always weigh heavily on us. They have reminded us again of the importance of our work and have only intensified our commitment to continuously improve the safety of our products and services," said Boeing CEO Denis Muilenburg.
"My team and I embrace our board's recommendations and are taking immediate steps to implement them across the company in partnership with our people, while continuing and expanding our ongoing efforts to strengthen safety across Boeing and the broader aerospace industry," he added.