The European Union warned Washington on Tuesday that the bloc would retaliate if the US slaps tariffs on EU exports as a 15-year long Airbus-Boeing row nears its climax.
The World Trade Organization is expected to greenlight billions of dollars in tariffs by the US against the Europeans as early as Wednesday, while the Trump administration has so far left a truce offer by Brussels unanswered.
"We are determined to pursue a positive trade agenda with the US, but ready to firmly defend our interests when and if necessary within WTO rules," said Ville Skinnari, the trade minister from Finland, which holds the EU's six-month rotating presidency.
The epic legal battle between Airbus and Boeing at the World Trade Organization began in 2004 when Washington accused Britain, France, Germany and Spain of providing illegal subsidies and grants to support the production of a range of Airbus products.
A year later, the EU alleged that Boeing had received $19.1 billion worth of prohibited subsidies from 1989 to 2006 from various branches of the US government.
The two cases were then tangled up in a messy legal quagmire, with each side being given partial vindication after a long series of appeals and counter appeals.
- 'No positive response' -
The Europeans in July made a proposal to call a truce in which both sides would admit fault and figure ways to curtail airline subsidies. The EU and US have reached such settlements in the past.
"Until the very last moment, we are hoping that we can start that dialogue, freezing our respective tariffs and enter that dialogue with the US," said EU Trade Commissioner Cecilia Malmstrom after talks in Brussels with European trade ministers.
"So far we have not received any positive response on that," she added.
Malmstrom said that the EU was exploring "all options" against the US, including ripping up truce agreements on past WTO cases.
Under WTO rules, the EU and US each have the right to punish the other, with Washington given a first crack at imposing tariffs. Reports have said the WTO will allow Washington to target between seven and eight billion dollars in European goods.
The EU side will then have their chance to slap similar duties on the US about six months later. Brussels is demanding $12 billion as punishment, but the WTO is likely to decide on a lower number.
The Airbus-Boeing row is just one of several issues stoking transatlantic tensions that quickly descended into acrimony when US President Donald Trump took office in 2017.
Trump has embraced a protectionist agenda, slapping import duties on steel and aluminium from the EU and other allies, while also threatening tariffs on European cars.
The US leader and European Commission President Jean-Claude Juncker agreed in July 2018 to a cease-fire in the conflict and carry out trade talks that have so far led nowhere.