‘Tariff Man’ Strikes Again – World Incredulous

“Grandstanding” is a word that’s getting tossed about on Tuesday following the USTR’s ill-advised decision to take matters into its own hands in a long-running dispute over Airbus subsidies.

The 14-year-old spat had been adjudicated at the WTO, but according to Bob Lighthizer, “the time has come for action”. When you work for “tariff man“, “action” means releasing a list of EU products – everything from aircraft to cheese to frozen swordfish fillets – that will be subject to duties under Section 301.

As you’re probably aware by now, the USTR cited a 2018 appellate report on the harm caused by “launch aid” for Airbus which apparently “caused significant lost sales to Boeing 787 and 747 aircraft, as well as lost market share for Boeing very large aircraft in the EU, Australia, China, Korea, Singapore, and UAE markets.”

Based on that, the US asked for the green light to impose countermeasures worth more than $11 billion/year, a figure Lighthizer reckons is “commensurate with the adverse effects caused by EU subsidies”. For their part, Europe says that’s “greatly exaggerated”.

Oddly enough – given Trump’s aversion to the body which he says “always f*&ks” the US – Lighthizer indicated the administration would await a ruling from a WTO arbitrator currently evaluating the EU’s challenge. To wit:

USTR is releasing for public comment a preliminary list of EU products to be covered by additional duties.  USTR estimates the harm from the EU subsidies as $11 billion in trade each year.  The amount is subject to an arbitration at the WTO, the result of which is expected to be issued this summer. 

Lighthizer claims the “ultimate goal is to reach an agreement with the EU to end all WTO-inconsistent subsidies to large civil aircraft.” Whenever the EU decides to end those subsidies, the administration promises to lift the retaliatory measures floated on Monday evening.

Speaking of retaliatory measures, the EU is drafting some of their own, which Brussels says will be “far larger” than what the USTR is prepping. It wasn’t immediately clear what that meant, which speaks to the idea that Trump has succeeded in creating a world where everyone acts like he acts – knee-jerk reactions to perceived slights accompanied by bombast, nebulous threats and superlatives.

For their part, Airbus says this is “totally unjustified”. “[We’ve taken] all necessary measures” in order to adhere to the WTO’s decision on illegal aid, the company said in a statement.

Airbus shares fell the most in two weeks, while Rolls-Royce Holdings and Meggitt were also hit on the news.

Of course the EU claims that Boeing benefits from similar subsidies, so this is hardly a one-sided dispute. In fact, the WTO ruled again last month that hundreds of millions in tax incentives to Boeing in Washington state are illegal.

“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 EU commission said Tuesday, on the way to promising that “the commission is starting preparations so that the EU can promptly take action based on the arbitrator’s decision on retaliation rights in this case”.

French Finance Minister Bruno Le Maire called the WTO’s rulings on that “clear”, before urging both sides to be “friendly”. “It’s in the interests of the US and the EU to find a friendly accord on the issue of penalties in the airplane sector”, Le Maire said at a press conference in Paris, adding that “when I see slowing world growth, I don’t think that we can afford a trade war, even if it’s just in one industrial sector”.

Of course it’s not just in “one industrial sector”. Arguably, the biggest problem with Trump’s Airbus “grandstanding” is that it comes at a time when many observers believe the US president will immediately pivot to the EU once a trade truce with Beijing is finally struck. Trump has dangled the threat of auto tariffs over the bloc for a year and it’s still not clear exactly what he plans to do in that regard. As things spiraled into an absurd tit-for-tat last year following the metals tariffs, Trump and Jean-Claude Juncker attempted to defuse the situation in July, but the tensions never abated entirely.

The latest broadside by Trump threatens to derail planned talks aimed at working towards “zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods” – to quote from last summer’s Trump-Juncker pow wow, where Jean-Claude reportedly wowed the US president with actual flash cards.

If all of this sounds ridiculous or otherwise petty to you, that’s because it most assuredly is. And it comes at the worst possible time for Europe, given the bloc’s ongoing struggle to avert an economic downturn. Of course that effort is complicated by the US-China spat and therein lies the cruel irony – the very moment Trump seals a deal with his “good friend” Xi, thereby providing an ostensible fillip to the German economy (which has suffered amid China’s downturn), the US looks poised to ratchet up the pressure on the EU, effectively kicking the bloc while it’s down.

Finally, it’s worth noting that diplomats from the EU and China rushed to agree on a joint statement for a summit in Brussels in the interest of showing a “united front” in the face of US aggression. “Diplomats reached an eleventh-hour accord on a draft communique after China made concessions on wording about industrial subsidies that removed a European veto threat”, Bloomberg writes, adding that “the last-minute agreement highlights European and Chinese determination to present unity in the face of Trump’s ‘America First’ challenge to the multilateral order.”


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5 thoughts on “‘Tariff Man’ Strikes Again – World Incredulous

  1. Uh huh. So one day after Boeing – the largest component of the Dow Jones Industrial Average – lost almost 4 1/2% on the BoA downgrade and Airbus gained over 1%, where Airbus gains at Boeing’s expense at the further grounding of the 737 Max planes in the global duopoly, where a deadly plane crash is the direct result of the government shutdown caused by Trump’s petulance over his racist monument’s funding, where his Defense Secretary is a lifelong Boeing executive, the same Boeing whose C.E.O. has regular and easy access to the President, Boeing, the second largest government contractor which pledged a $1,000,000 to the corrupt Trump Inauguration, now gets the benefit of Tariff Man. #EmolumentsClause #25thAmendment

    1. Sure but the Senate will do anything for him. He could shoot a man in the street and probably a lot more without so much as a wrist slap from the Senate. He’s the King for the moment. The rule of law is either completely dead or in a coma.

      1. Trump is King for the moment (thank you Mitch McConnell), but not forever. And you gotta think payback for his racist, corrupt, authoritarian antics is gonna be a b*tch.

    2. No intention to carry water for Trump but to suggest that a plane crash (in Ethiopia) is a “direct result of the government shutdown caused by Trump’s petulance” is absolutely absurd.

      1. The F.A.A. could not approve of the necessary Boeing software upgrade because of the shutdown. So there’s that.

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