A selection of major European firms saw their share price sink Monday following reports that the World Trade Organization has granted President Donald Trump the right to slap billions of dollars in tariffs on EU imports.
If confirmed, the WTO’s decision would be to compensate the U.S. for what Washington has long argued are illegal subsidies enjoyed by the European plane maker Airbus.
Both Politico and Reuters reported that the ruling has been made in the U.S.’s favor, meaning levies can soon be imposed on certain goods.
When contacted by CNBC, a media spokesperson for the WTO said the organization was not yet commenting as the case remained live and details had to remain confidential.
The final ruling will mark the end of a complaint first brought by the United States in 2006.
A European Commission spokesperson told CNBC that it did not comment on leaks but added that the EU had “consistently communicated to the United States that the European Union is ready to work on a fair and balanced solution for our respective aircraft industries.”
Airbus and LVMH stocks slip
Washington has long believed that EU countries have illegally supported Airbus by granting subsidized loans known as “launch aid,” as well as separate state help for the development of the A350 and superjumbo A380.
Following the reports, Airbus shares opened sharply lower Monday. Shortly after 10:00 a.m. London time, the stock price had slipped by 3.65%.
In April this year, U.S. officials published a wide list of European products it said it would select from in an attempt to recoup the $11 billion that Washington deems as the amount incurred by U.S. firms.
Aside from European-built aircraft and parts, goods on the list include motorcycles, food, drink, clothes, base metal parts and jewelry equipment.
The French luxury group LVMH, which pulled 46.8 billion euros ($51.8 billion) in sales across 2018, also suffered as markets in Europe opened Monday. The group’s stock price had slipped by 2.6% shortly after 10.00 a.m. London.
Europe seeks Boeing revenge
The EU has its own separate case before the WTO, in which it argues that the U.S. plane maker Boeing receives unfair financial assistance from the U.S. federal government.
In terms of a ruling from the WTO, that case is said to be about nine months behind the Airbus decision.
In April this year, the European Commission launched a public consultation on its preliminary list of products from the United States that it would seek to hit with import tariffs.
The list, representing about $20 billion worth of U.S. exports to the EU, also covered a wide range of items including aircraft, chemicals and food products such as frozen fish and citrus fruit.
EU Trade Commissioner Cecilia Malmström said at the time that Brussels “did not want a tit-for-tat” scenario adding that the EU remained open for talks with the U.S.