The WTO dismissed the appeal from Airbus in its marathon spat with U.S. rival Boeing, both of which have accused each other of receiving illegal subsidies.
In its ruling on Tuesday, the World Trade Organization (WTO) said the European Union had failed to remove support in the form of preferential government loans for Airbus's A380 superjumbo and A350 twin-aisle jet programs, causing losses for Boeing and USA aerospace workers.
The WTO decision affirmed a ruling that France, Germany, Spain and the United Kingdom had failed to adequately remedy market-distorting aid for the launch of Airbus's A380 superjumbo, infrastructure support and equity investments that unfairly benefited the plane maker.
The ruling, which rejected some United States claims, was a relative U.S. victory on the question of European Union aid for two aircraft: Airbus' 350XWB - a rival of Boeing's 787 - and the double-decker A380, which has eclipsed the Boeing 747 as the world's largest commercial passenger plane. But its decision on the A320 and A330 models is seen narrowing the scope of punitive tariffs in one of the world's longest and costliest trade disputes.
"This is a high-stakes battle", Douglas Holtz-Eakin, president of the American Action Forum, told Richard Quest on CNN's "Quest Means Business" on Tuesday.
"President Trump has been clear that we will use every available tool to ensure free and fair trade benefits American workers", Robert Lighthizer, the U.S. trade representative, said after the ruling.
The tariffs could be scheduled as early as 2019 and would likely be the largest-ever WTO authorization of retaliatory tariffs, Boeing said.
On today's ruling, both manufacturers are claiming victory. The company added that it plans to eliminate the subsidies that the WTO ruled were unfair.More news: Seattle Mariners' Robinson Cano Gets 80-Game Ban
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The fight dates to 2004, when European Union authorities said Boeing received $19 billion in unfair subsidies from federal and state governments between 1989 and 2006. But before the USA can impose tariffs, it will have to request an estimate of damages from a WTO arbitration panel, and Brussels has the right to challenge the amount.
However, the amounts will depend on arbitration, expected to take around a year.
The WTO decision on the latest in a string of tussles between Europe's Airbus and USA rival Boeing comes as the Trump administration has exerted intense pressure on the Geneva-based organisation over what the president alleges is its "unfair" treatment of the United States.
A ruling in favor of the European aerospace giant would, in turn, allow Brussels to impose its own punitive tariffs on USA goods under WTO rule.
"Today's report is really only half the story", Airbus Chief Executive Tom Enders said.
"The result is simple: Airbus pays back its loans, Boeing pays back nothing and continues to exploit the generosity of the USA taxpayer", outgoing Airbus CEO Tom Ender said.
"Despite Boeing's rhetoric, it is clear that their position today is straightforward healthy: they have half the market and a full order book, they have clearly not been damaged by Airbus repayable loans", he said.