Europe Back in the Crosshairs of U.S. Trade Policy

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Global Trade, Imports

Andrey Kuzmin/Adobe Stack

The Trump administration announced this week it was considering the imposition of tariffs on $11 billion worth of European Union imports, said by the Financial Times to include such diverse products as passenger helicopters, Roquefort cheese, olive oil and wines.

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The move is said to be in response to harm the administration claims is being caused to Boeing by E.U. subsidies for Airbus. U.S. Trade Representative Robert Lighthizer is said to have a list of E.U. products on which he intends to levy tariffs as retaliation for long-running U.S. complaints about European aircraft development cost subsidies to the Airbus Group.

Airbus, it must be said, counters that Boeing has received, in one form or another, similar subsidies and support, an argument that has brought temporary truces over this issue in the past. This time, however, the argument appears to be swept aside by the current administration, maybe because Boeing is under intense pressure over the 787 Max grounding and new build cancelations.

Although no friend of the World Trade Organization (WTO), the Trump administration has pointed out the organization has ruled Airbus’ past payments illegal under a May 2018 ruling regarding Airbus subsidies, but Airbus claims it has since cleaned up its act and no longer follows the practices ruled against in the report.

The move by the Trump administration comes on the heels of a separate WTO ruling establishing that the U.S. had itself illegally subsidized production of Boeing aircraft — a decision that incensed U.S. officials, according to the Financial Times.

So, are we clear on who is at fault?

No, but like most such situations, it is highly nuanced and there is no totally right or totally wrong party.

But President Trump doesn’t do nuanced situations — blanket tariffs are more to his liking — and so it seems likely that’s what Europe may get.

The Financial Times quotes Lighthizer as saying the potential tariffs on E.U. goods would be imposed under Section 301 of the Trade Act of 1974 — the same legislation used to justify the tariffs imposed on Chinese imports over the past year – if a report from the WTO on the value of the allowed “countermeasures” proves supportive.

The tariffs would cover not just new helicopters, new aircraft and aircraft parts coming from France, Spain, Germany and the U.K. — the four countries where Airbus has manufacturing facilities — but also a much wider range of products slated for higher tariffs including, the Financial Times reports. Other items covered include a variety of cheeses (from Roquefort to Pecorino, Gouda and Stilton), as well as many different kinds of jams.

Fresh fruits, such as oranges and lemons, are also targeted (although with the U.S. and South America being dominant producers of citrus fruits, you must wonder how significant this could be). Other targets include seafood like herring, octopus and clams and many types of wines – aimed squarely at the French, no doubt.

Other goods, including motorcycles, table knives, ceramic tiles and kitchenware, bed linen, sweaters, handbags, and essential oils were also on the list – you have to wonder how they dream up these lists, don’t you?

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Round one of a transatlantic trade war may be brewing; it seems neither side wants it, but past experience suggests Europe is likely to blink first.

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