The US will impose punitive tariffs on the EU from 18 October following the World Trade Organization decision giving the green light to retaliation on $7.5bn worth of goods, senior trade officials said.

In the case centered on government subsidies to Airbus, a senior official in the office of the US Trade Representative said the US will hit the EU with 10% tariffs on aircraft, but not aircraft parts, and 25% on other products, including some agricultural and industrial goods.

The official told reporters the WTO decision allows tariffs of up to 100%, but the US decided not to go that far as it seeks a resolution to the 15-year dispute.

The move threatens to trigger a tit-for-tat transatlantic trade war as the global economy falters.

The decision by the WTO comes on top of a tariff war between the US and China.

Earlier, the European Commission said that a US move to impose trade sanctions on EU imports would be "short-sighted and counterproductive" and risked causing damage on both sides of the Atlantic.

The WTO has found that both Europe's Airbus and its US rival Boeing received billions of dollars of illegal subsidies in the world's largest corporate trade dispute, a legal marathon dating back to 2004.

The agency's provisional list of products that are eligible to be targeted with tariffs ranges from Airbus jets themselves to helicopters, wine, handbags and cheese.

Before any tariffs can be imposed, the WTO's Dispute Settlement Body must formally adopt the arbiters' report in a process expected to take between ten days and four weeks.

Its next scheduled meeting is on 28 October, but Washington could request a special meeting 10 days after the arbiters' report is published, suggesting an earliest possible final nod on 12 October. 

In the largest case ever handled by the WTO, Washington had requested permission to impose tariffs on up to $11.2 billion of EU goods. 

Brussels is pushing for tariffs of around $10 billion on American goods in a parallel process to be decided by the WTO early next year.

While the level of tariffs amounts to less than three days' worth of annual trade between Europe and the US, importers led by US airlines that buy Airbus jets have urged Washington to be selective when choosing industries to hit in order to avoid causing collateral damage to the US economy.

The WTO award in the dispute could fuel rising trade tensions, diplomats say.

EU manufacturers are already facing US tariffs on steel and aluminium and a threat from US President Donald Trump to penalise EU cars and car parts. The EU has in turn retaliated.

The Trump administration has concluded tariffs were effective in bringing China to the negotiating table over trade, and in convincing Japan to open its agricultural market to US products. 

Washington is unlikely to skip the opportunity to implement tariffs in the case over aircraft subsidies, according to current and former US officials.

Airbus has said this would lead to a "lose-lose" trade war and has published a video stressing its contribution to the US industry through local assembly plants and 4,000 direct jobs, headlined "Together, let's keep American aerospace great".

Ibec called for immediate talks to avoid an escalating EU-US trade dispute. 

"Business links between Ireland, the EU and the US are vitally important to global supply chains and have been overwhelmingly positive for our workers and consumers," said Ibec Director of EU and International Affairs, Pat Ivory.

"There is an urgent need for the European Commission and US administration to negotiate a speedy resolution to this dispute. Any new tariff barriers will have significant economic and employment implications on both sides of the Atlantic, potentially hitting Irish businesses when they are coping with Brexit."