FILE PHOTO: European Union flags fly outside the European Commission headquarters in Brussels, Belgium March 19, 2019 REUTERS/Yves Herman/File Photo

BRUSSELS (Reuters) - The European Union is preparing for possible retaliation over subsidies for Boeing, a European Commission source said on Tuesday, following Washington’s listing of EU products it plans to hit with tariffs in their aircraft subsidies dispute.

The U.S. Trade Representative on Monday proposed a list of EU products ranging from large commercial aircraft and parts to dairy products and wine on which to slap tariffs as retaliation for Airbus subsidies.

A Commission source said that the level of proposed U.S. countermeasures was “greatly exaggerated”, adding the amount of retaliation could only be determined by a World Trade Organization arbitrator.

“In the parallel Boeing dispute, the determination of EU retaliation rights is also coming closer and the EU will request the WTO-appointed arbitrator to determine the EU’s retaliation rights,” the Commision source said, adding that the Commission was making preparations so that it could take action after the arbitrator’s decision.