Airbus Boeing Trade War: How EU US Resolved 17-Year Dispute

The TTC, established in 2021, serves as a technical dialogue channel between the EU and US on trade, technology, and emerging disruptive technologies. The council extended a 3-year cooperation on semiconductor disruptions, particularly legacy chips from China, and agreed to share market intelligence about non-market policies. However, no progress was made on a critical minerals agreement that would allow European-mined minerals to qualify for US clean vehicle tax breaks. The TTC has been criticized for becoming a 'catch-all' forum that addresses too many issues without achieving significant breakthroughs, particularly in resolving major disputes like the Boeing-Airbus dispute.

The EU-US Trade and Technology Council (TTC) serves as a strategic platform for coordinating transatlantic approaches to trade, technology, and economic security challenges, enabling the United States and European Union to align their positions on critical issues such as semiconductor supply chains, artificial intelligence governance, and market distortions from other nations. This cooperation leverages the combined economic weight of nearly half the world's GDP to enhance supply chain resilience, develop joint standards, and counter non-market practices, demonstrating how international partnerships can strengthen both economic security and technological competitiveness in an increasingly complex geopolitical landscape.

Experts like Professor William Yu from UCLA Anderson School of Management, former governor of the People's Bank of China, and Chinese economist Jao Xiao have pointed out that while the trade war appears to be a battle of tariffs and economics, its root cause is China's long-standing disregard for international trade rules. WTO rules are market-driven, favoring free trade and fair competition. However, the CCP insists on maintaining party control over enterprises, and many foreign companies investing in China report that doing business in China is marked by widespread corruption and a non-market state-driven approach. The European Union Chamber of Commerce in China released a report criticizing the CCP's Made in China 2025 strategy, which uses government subsidies, forced technology transfers, and protectionist policies to strengthen domestic monopolies.

The US-EU Trade and Technology Council (TTC), established in 2021 as a response to failed TTIP negotiations, serves as a mechanism for transatlantic cooperation on trade and technology issues by creating adjacent dialogues that isolate controversial elements like the Inflation Reduction Act's electric vehicle subsidies and European digital sovereignty measures, allowing the partnership to maintain momentum on shared priorities such as AI risk management and digital infrastructure for the global South while addressing fundamental trust issues between the two democracies.

The Trade and Technology Council (TTC) was established in 2023 between India and the EU to enhance trade and technology cooperation. The first meeting was conducted virtually, but the February 2024 meeting marks the first time this council is being conducted offline with a full delegation of 27 EU countries and their 27 commissioners. This represents a significant milestone in India-EU relations, as the TTC was previously only established with the US.

A new McKinsey survey reveals that while the commercial aerospace industry has experienced strong growth since the COVID-19 pandemic, airlines are already feeling a demand squeeze that other industry segments (OEMs, suppliers, MROs, lessors) have not yet recognized. The research found that airlines are five times more likely to retire or park aircraft than defer deliveries when facing excess capacity, and approximately 2,000 narrow-body aircraft are past their normal retirement date. This creates a potential scenario where entire fleet types could be retired simultaneously, significantly impacting industry profitability and MRO providers who have been relying on servicing legacy aircraft. The industry's high confidence in its ability to adjust quickly may be misplaced, as different segments have conflicting incentives and the long cycle nature of aircraft platforms creates insulation that may delay recognition of demand challenges.

Global supply chain disruptions are causing significant economic losses in the aviation industry, with projected costs exceeding $11 billion in 2025, including $4.2 billion in fuel inefficiency losses from older aircraft, $3.1 billion in increased maintenance costs, and $2.66 billion in engine rental expenses, while aircraft deliveries dropped 30% in 2024 to 1,254 units despite record demand of 17,000 aircraft.

The global aviation industry experienced severe disruption during the pandemic. Airline operations in North America declined by 65-120 million passengers, while Latin America and the Caribbean saw a drop of 50-90 million passengers. Revenue losses reached $17-32 billion in North America and $10-18 billion in Latin America. The global economy contracted by 3%, worse than the 2008-2009 financial crisis. The aerospace industry was among the most severely affected sectors, with commercial aerospace experiencing at least a 35% impact. Mexico's aerospace industry faced significant challenges with 60,000 direct jobs across 19 states expected to lose 20,000 positions. Three recovery scenarios were presented, with the most probable involving reduced demand reaching 73% of new aircraft orders and recovery reaching approximately 90% of pre-pandemic levels.

This section traces how interconnected global events systematically dismantled the aerospace industry's traditional power structure. The 2020 pandemic caused factories to shut down and demand to collapse, forcing suppliers to close. When demand rebounded, suppliers faced insurmountable obstacles: workers had left, materials were unavailable, and facilities couldn't restart quickly. By 2025, 17,000 aircraft orders remained unfilled, costing airlines $110 billion annually in excess fuel, maintenance, and leasing costs. This crisis exposed fundamental weaknesses in the 50-year-old pyramid supply chain structure that had protected Boeing and Airbus, creating the conditions necessary for new competitors to emerge.

Airlines operate on precarious financial models dependent on advance ticket sales and continuous cash flow. When demand collapses suddenly, airlines face immediate liquidity crises because their balance sheets cannot quickly generate sufficient funds. This structural vulnerability explains why the industry lost $314 billion in 2020 and why consolidation is inevitable. The crisis also affected original equipment manufacturers like Airbus, which reduced production to 576 aircraft, demonstrating how the pandemic disrupted the entire aerospace supply chain from manufacturers to operators.

Sustainable Aviation Fuels (SAF) are categorized into biofuels (capturing carbon through natural processes) and synthetic fuels (capturing carbon artificially and recombining with hydrogen). Both are integral to the aviation industry's decarbonization roadmap targeting carbon neutrality by 2050. The industry faces competition with the automotive sector for these limited sustainable fuel resources, as both sectors seek to transition from fossil fuels. The United States' Inflation Reduction Act represents a powerful policy tool attracting significant investment in sustainable fuel production through subsidies. The European Union, which previously had an advanced roadmap, is now working to develop comparable investment frameworks to remain competitive in the global transition to sustainable fuels.

Sustainable Aviation Fuel (SAF) represents the primary transition solution for the aviation industry until hydrogen technology becomes viable. SAF can address approximately half of the industry's environmental challenges but requires global logistics infrastructure similar to traditional fuel systems. Brazil is positioned to become a major SAF production center, supplying airports worldwide. Engine manufacturers have already adapted their designs to accommodate SAF, and new engines are being developed specifically for this fuel type.

Sustainable Aviation Fuels (SAF) are alternative fuels produced from non-food sources like cooking oils, agricultural residues, and forest waste, designed to replace conventional kerosene in aviation while reducing CO2 emissions; currently certified for use up to 50% in aircraft engines, with production capacity still limited and requiring mass development of production chains, alongside synthetic fuels made from captured CO2 and low-carbon hydrogen, and hydrogen fuel as a long-term solution, all contributing to the aviation industry's goal of achieving carbon neutrality by 2050.

The aviation fuel industry is transitioning to Sustainable Aviation Fuel (SAF), produced from waste cooking oil and plant-based materials, reducing carbon emissions by 80%. The EU mandates 2% SAF by 2025, rising to 70% by 2050. The SAF market has three competitive dimensions: raw material acquisition (waste cooking oil, animal fats), technology and certification (ISCC standards), and government policy support (tax incentives). South Korean companies like GS Caltex and SK Energy are positioning themselves to capture this $trillion market through global supply chains and advanced conversion technology.

Sustainable Aviation Fuel (SAF) uses feedstocks like cooking oil to reduce emissions by up to 80%. It can blend with traditional jet fuel and use existing infrastructure. Three main types exist: pure biofuels from crops, waste-based fuels, and synthetic e-fuels made from captured CO2 and green hydrogen. Boeing pledges 100% SAF certification by 2030, but aircraft modifications are needed for higher blends. SAF currently represents less than 1% of global jet fuel and costs 3-5x more. The industry needs 450 billion liters annually by 2050, requiring massive scaling from current producers like Neste, which produced only 125 million liters last year.