France calls for firm tariff response avoiding escalation

By Tim Hepher

TOULOUSE, France (Reuters) -France's industry minister called on Friday for a proportionate but firm response to U.S. tariffs and said Europe wanted to avoid a damaging trade escalation, with the door open to negotiation.

Speaking to reporters at an Airbus factory in Toulouse, Industry Minister Marc Ferracci said sweeping tariffs introduced by U.S. President Donald Trump were without precedent since the 1930s and could destabilise the global economy and cost jobs.

"The response must first of all be a united European one," Ferracci said.

"We obviously expect a response which must be proportionate because neither France nor Europe want an escalation in trade: a trade war can only have losers and it is absolutely certain that it will hit the American economy."

He was speaking as a global stock market rout showed no sign of slowing after Trump on Wednesday imposed widespread tariffs on U.S. imports including 20% on the European Union where most Airbus jetliner factories are based.

China announced additional tariffs of 34% on U.S. goods, escalating a trade war that has fed fears of a recession.

European Commission President Ursula von der Leyen on Thursday described Trump's tariffs as a major blow to the world economy and said the EU was prepared to respond with countermeasures if talks with Washington failed.

"We are in a posture of negotiation," Ferracci told reporters. "We will have to negotiate but negotiation also implies firmness."

Airbus CEO Guillaume Faury, when asked how the European planemaker would respond to the U.S. tariffs, said Airbus was still analysing how to react to the situation.

U.S. CARRIERS

Airbus has most of its factories in Europe including the former A380 plant where it now assembles smaller planes including one visited by ministers on Friday.

Elsewhere in the factory, airplanes were being assembled for U.S. majors United and Delta, highlighting the stakes involved for carriers in any widening tariff dispute.

Airbus also assembles some of its planes in Mobile, Alabama, where it is in the midst of a long-planned capacity expansion.

Ferracci reiterated an appeal by French President Emmanuel Macron for major French companies to pause new investments in the United States until the trade situation became clearer.

Airbus said it had taken note of Macron's comments and was assessing their impact.

Asked whether the EU would respond to any tariffs on Airbus jets by imposing direct retaliatory tariffs on U.S. rival Boeing, Ferracci told Reuters that the details of any possible countermeasures would be discussed next week.

Both planemakers were caught up in an 18-month tariff war over aircraft subsidies that involved tit-for-tat duties on aircraft and spilled over to other industries in 2020 and 2021.

The dispute led to a five-year truce that remains in effect but analysts warn both companies, as well as many of their suppliers, look set to be swept up in today's broader tensions at a time when supply chains remain disrupted from the pandemic.

A French government spokesperson said on Thursday new measures on a range of goods and services would come into force at the end of April. Nothing is yet decided, she added, but services, notably digital services, were likely to be a focus.

Ferracci meanwhile announced 285 million euros of research support for the French aerospace sector, unchanged from 2024, which he said would help Airbus keep proposals for a future successor to its best-selling A320neo aircraft on track.

(Reporting by Tim Hepher; Editing by GV De Clercq and David Evans)