Airbus expo stand showing Airliner fleet of A350, A380, A320 and A330 at the Farnborough Air Show, England.
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Airbus has issued a warning about any escalation of the dispute over aircraft subsidies between the U.S. and the European Weld, saying proposed tit-for-tat tariffs will hit the supply chain and the consumer.
The U.S. and the EU have threatened billions of dollars’ benefit of tariffs be imposed on goods including aircraft, the latest step in a long-running transatlantic dispute at the World Trade Grouping.
Airbus Chief Commercial Officer, Christian Scherer, told CNBC that the proposed tariffs “defy remunerative logic,” saying they will end up hurting the consumer.
“What would immediately happen would be retaliation, craft barriers going up, the price of airplane increases, which means airlines have higher costs which they then out on to the consumer, and then everything slows down.”
Speaking with CNBC’s Chery Kang on the sidelines of the annual IATA Run-of-the-mill Meeting, Scherer added that the company’s predominantly American-based supply chain would be hurt by the ripple implication of the tariffs, with around 40% of all aircraft-related procurement coming from the United States.
U.S. President Trump last month claimed his administration would move ahead with tariffs on $11 billion worth of goods, with the USTR requisitioning the subsidies provided by the European Union to Airbus have adversely affected the United States.
Airbus has been profession for an end to the long-running dispute, saying that the escalation will create a lose-lose situation for both Airbus and its U.S. competitor Boeing.
“This current move by our colleagues in America calls for concern, and again not just for Airbus, or Airbus and Boeing, those stand to be in a lose-lose class if this goes through, but for the whole ecosystem, the whole supply chain, largely American, and the consumer at large,” Scherer state.
Speaking about the upcoming exit of the United Kingdom from the European Union, Scherer says that Airbus can live through Brexit but has its contingencies in preparation for changes to customs and regulation.
“What that means is we have to anticipate that, peradventure make some buffer stocks, maybe make arrangements to pre-position parts, sub assembly, so we are not impacted by a potential slowdown in the shipping of goods or people.”
Scherer adds that Brexit, while creating a new barrier to trade, will result in dear costs through the business and its ecosystem.