Planemaker Boeing received at least 5.3 billion dollars (3.7 billion euros) of illegal US subsidies, the World Trade Organisation has found.
The ruling by a panel of trade judges is the latest round in a six-year long battle over subsidies between Boeing and European rival Airbus.
Last year a separate WTO trade panel condemned European support for Airbus in a parallel case.
The WTO said the Boeing subsidies included support in the form of research and development payments from the NASA space agency.
Both sides immediately claimed the upper hand in the row.
“This WTO panel report clearly shows that Boeing has received huge subsidies in the past and continues to receive significant subsidies today,” said European Union trade chief Karel De Gucht.
Airbus, part of European aerospace group EADS, said it had lost $45 billion (31 billion euros) in aircraft sales because of the subsidies.
US Trade Representative Ron Kirk said the ruling vindicated Washington’s position that “the subsidies the Europeans give to Airbus dwarf anything that the US government does for Boeing.”
The transatlantic subsidy dispute has long soured relations between two of the world’s biggest trading powers and looks set to continue to do so as both sides are considering further appeals.
De Gucht called on the US to work with the European Union on a mutually agreed solution to the dispute.