Washington can now hit the EU with tariffs on billions of dollars worth of goods.
After the World Trade Organization ruled on Wednesday that the EU had provided illegal subsidies to Airbus.
The ruling gives the US the green light to impose tariffs on $7.5 billion worth of European exports, but threatens to trigger a tit-for-tat transatlantic trade war as the global economy falters.
Reuters reporter Tim Hepher:
(SOUNDBITE) (ENGLISH) REUTERS' TIM HEPHER:
"Both sides have made overtures to try and get some sort of settlement. They both claim to have taken the front foot in pushing for a negotiation and have said they've been rejected by the other side. It's a bit like an enormous family dispute. You can't tell who's right and who's wrong. Certainly we know the overall trade relationship and the EU is very tense. And that's against the backdrop of global tensions so the political climate is rather complicated. If they do decide that they want to settle this case, they could work it out. Politically, that's another question."
The WTO Decision ends part of a 15-year-dispute. It will later rule on Boeing which it found in a previous decision benefited from illegal aid in the U.S.
In response to Wednesday's ruling, the European Commission said that any new tariffs levied by the US would be "shortsighted and counterproductive."
According to a source, the US is expected to move quickly to narrow down a list of goods that it will target.
The provisional list included Airbus jets but also wine, handbags and cheese.