US, EU to Hit Each Other With More Tariffs Over Boeing-Airbus Rivalry
Bad news for world economy and global commerce. Good news for a multipolar world
Investors who had hoped that President Trump’s apparent willingness to cave on trade negotiations with China – despite all the tough talk from the administration – might spell an end to the global trade conflict are about to be sorely disappointed. Just hours after the US released a list of EU products targeted for additional tariffs following a favorable WTO ruling that aerospace company and Boeing arch-rival Airbus has benefited from anticompetitive government subsidies, the European Union has shot back with trade threats of its own.
According to Bloomberg, the European Union reacted to threats of US tariffs on $11 billion of EU goods by preparing similar action against American products in a tit-for-tat case at the World Trade Organization concerning aid to Boeing Co.
“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 European Commission, the bloc’s executive arm, said in an e-mailed statement in Brussels.
“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,” it added.
The commission added that the $11 billion figure proposed by the US is significantly higher than the WTO would allow.
“The EU is confident that the level of countermeasures on which the notice is based is greatly exaggerated; the amount of WTO-authorized retaliation can only be determined by the WTO-appointed arbitrator,” the commission said.
“The figure quoted by the USTR is based on U.S. internal estimates that have not been awarded by the WTO.”
Echoing its stance from 10 years ago, before the long-running battle over aircraft subsidies was put before the WTO by the US, the commission said it would be willing to negotiate a settlement with the US.
“The EU remains open for discussions with the US, provided these are without preconditions and aim at a fair outcome,” the commission said.
As we pointed out last night, America’s latest shot across the bow in its simmering trade spat with Europe – which has so far involved US tariffs on steel and aluminum, retaliatory EU tariffs on uniquely American products like bourbon and motorcycles, as well as Trump’s looming threat to impose tariffs on EU auto imports – comes as i) Trump is reportedly preparing to fold in his trade war with China, punting enforcement to whoever is president in 2025, and ii) Boeing has found itself scrambling to preserve orders as more airlines cancel orders for Boeing 737s, or putting their orderbook on hold.
Whatever happens next, critics will decry the spat as yet another threat to global trade, which is coming at a particularly inopportune time, as it risks aggravating a “synchronized slowdown” in the global economy.
Only a matter or time? #Trump threatens with new #tariffs, aimed at the Eurozone for providing subsidies to Airbus. pic.twitter.com/RHo8ryO7UA
— jeroen blokland (@jsblokland) April 9, 2019
But somehow, we imagine, markets will find a way to read this as bullish, as every step back from the ledge will be heralded as yet another reason for ‘trade-deal optimism’.
Source: Zero Hedge
“US, EU to Hit Each Other With More Tariffs Over Boeing-Airbus Rivalry
“Bad news for world economy and global commerce. Good news for a multipolar world”
“The sooner the Europeans declare independence from America the better. Truth is, Europeans don’t want it, but with enough pushes like these they might eventually change their mind”
A profound truth that is likely to become one of the new shaping forces in the world.
I think a great deal of the change towards a multi-polar world has already occurred – the remarkable rise of China and India and the re-emergence of Russia from its own great depression after the fall of the USSR – but we are getting to a point where enough of these changes will have accumulated so that something entirely new emerges, a kind of world revolution in politics and economic relations, an event perhaps as epochal as the Industrial Revolution.
America’s only response to what is (inevitably) on its way seems just to become more of a pounding fist than ever.
And that just won’t do, but it may well cause a lot of grief and bloodshed along the way.
It’s really rather sad to see a great country go so desperately, insanely wrong.
Of course, such behavior provides all the more cause for older relationships to crack and strain plus strong incentive for new ones to form.