The US is threatening the EU with $11 billion in sanctions over subsidies to Airbus, just as its main rival Boeing endures its most difficult period in decades

Reuters/Mike Segar

Donald Trump, then the Republican presidential nominee, walks off his plane, a Boeing 757, in Colorado in September 2016.

• The US has outlined $11.2 billion in possible sanctions on EU products, citing subsidies to its largest aircraft maker, among other issues.
• The US Trade Representative said Monday that the World Trade Organization "repeatedly" found that EU subsidies to France-based Airbus "caused adverse effects" to the US.
• The move continues a long-running rivalry in which the US and EU accuse each other of unfairly subsidizing aircraft manufacturers.
• The threat also comes as Boeing, Airbus' largest rival, faces its biggest crisis in decades over two fatal plane crashes that could threaten the reputation of the US aviation industry.
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The US is threatening the EU with sanctions on $11.2 billion in imports over subsidies to its largest aircraft maker, just as Boeing endures its most difficult period in decades in the fallout from two fatal plane crashes.

The US Trade Representative said on Monday that it the World Trade Organization found "repeatedly that European Union (EU) subsidies to Airbus have caused adverse effects to the United States."

Robert Lighthizer identified EU products, including wine, cheese, and Airbus aircraft, that could face tariffs when imported to the US.

The US government did not link the sanctions to Boeing's troubles, and cited a years-long dispute over subsidies. The optics of the move will nonetheless be noticed, especially as criticism mounts of the close relationship between Boeing and the US government.

The US first accused the EU of subsidizing aircraft made by France-based Airbus to the WTO in 2004, in a case that has yet to be resolved. The EU has also accused the US of subsidizing aircraft made by Boeing, and the TWO has found that both the EU and the US were giving improper subsidies.

Read more: Stocks are down after Trump threatens tariffs on EU helicopters, ski-suits, cheeses and wines

Trade Representative Robert Lighthizer said on Monday that "This case has been in litigation for 14 years, and the time has come for action."

MICHAEL TEWELDE/AFP/Getty Images

People stand near debris at the crash site of the Ethiopia Airlines Boeing 737 Max flight in March.

The list of items subject to tariffs will not be finalized until the WTO rules on a challenge from the EU, the statement said.

Lighthizer's statement comes as Boeing, Airbus' biggest rival, faces an ongoing crisis prompted by two air disasters.

Two similar accidents saw its 737 Max plane crash and kill everybody on board: one operated by Indonesian airline Lion Air and the other by Ethiopian Airlines.

The plane is one of Boeing's best-sellers but it has now been grounded around the world as Boeing works on a fix to its anti-stall software system.

Read more: Boeing sinks after cutting production of the 737 Max

Boeing announced on Friday that it will cut production of the plane from 52 planes a month to 42 as investors worry about the long-term impact of the crashes on the manufacturer.

ERIC PIERMONT/AFP/Getty Images)

French President Emmanuel Macron sits in the cockpit of an Airbus A 400M in Paris in June 2015, when he was economy minister.

An Indonesian airline tried to cancel its order for Boeing 737 Max aircraft, in the wake of the crash, while a Chinese aircraft leasing firm cancelled $5.8 billion in orders for the 737 Max.

China also signed a $34 billion order for 300 Airbus planes the day after it suspended the airworthiness certificate for the Boeing jets.

Boeing's crisis has also spread to the Federal Aviation Administration, where scrutiny has intensified over its practice of allowing Boeing to carry out much of government's regulatory work itself.

Read more: The US's reputation as the gold standard for aviation safety is at a make-or-break moment as the 737 Max crashes prompt questions about Boeing's conflicts of interest

The crisis over the 737 Max crashes is Boeing's toughest period in decades. The company struggled during the 1970s recession, and had a difficult launch in the 2000s for its 787 Dreamliner. Christine Negroni, an aviation writer and the author of The Crash Detectives, told NPR that Boeing is in a tougher position now.

Boeing CEO Dennis Muilenburg, apologising last week after the crashes, said: "I cannot remember a more heart-wrenching time in my career with this great company."

The crisis, coupled with President Donald Trump's close relationship with Boeing, may also be threatening the reputation of the US as the leader in aviation, experts told Business Insider.

Reuters

A Boeing 737 Max aircraft at under construction at the Boeing factory in Renton in March.

Michael Dreikorn, a former FAA official who also previously served as vice president of quality and compliance for the jet-engine maker Pratt & Whitney, told said he thought the FAA was taking a "credibility hit globally" as a result of the two crashes.

"The US's reputation can take a hit," he said. "And it probably should take a hit."

Get the latest Boeing stock price here.