- The WTO chooses Trump’s Side
- When did this trade dispute begin?
- Which products will be subjected to tariffs? and on which countries?
- How do tariffs impact the Global Economy?
What do you think would happen if the WTO stood behind Trump’s administration declaring its victory over the EU?
Tariffs on the European Goods and billion dollars for the US Government.
The WTO chooses Trump’s Side
The US President Donald Trump hailed a “nice victory” after the US has won its case against the EU in the WTO over illegal aircraft subsidies.
The WTO gave the United States the green light to slap 100% tariffs on $7.5 billion of the EU goods, but Washington has shown its mercy, at least for now, and will only impose a 10% levy on new airplanes from the EU and 25% on other agricultural and industrial products.
The US administration will move quickly to place levies on the EU goods by October 18, according to senior officials from the US trade representatives.
When did this trade dispute begin?
The dispute goes back to 2004 when the battle between the US and the EU started over illegal government subsidies for the two aircraft manufacturers giants; the European Airbus and the US Boeing.
It lasted more than 15 years even before Trump came to the White House.
The US government filed a lawsuit about the EU’s supporting for Airbus.
Then the European government launched a similar claim that Boeing had received illegal aid – $19 billion from the US government.
The WTO has ruled in favor of the US after the EU failed to abide by WTO rules in supporting Airbus.
The EU is also expected to win its case early next year over illegal aid to Boeing and to slap its tariffs offensive.
These decisions will put the 15 year battle over subsidies to rest once and for all, just as China’s state-backed COMAC is preparing to shake up what has for decades been a Western duopoly in the aerospace market.
Which products will be subjected to tariffs? and on which countries?
Britain, Germany, France and Italy will suffer from the new tariffs issued by the USTR (the U.S. Trade Representative’s office).
The US administration will impose 10% tariffs on aircraft from France, Germany, Spain and the UK and 25% tariffs on agricultural and industrial products, including:
|United Kingdom||Whiskies, Pullovers, Jackets, Bed Linens, Blankets and various Garments|
|Germany||Coffee, Knives, Camera’s parts and Machinery|
|France||French Wine and Olives|
|Europe||In addition to Italian cheeses such as Parmigiano-Reggiano, Spanish olive oil, Frozen meat and Pork products|
How do tariffs impact the Global Economy?
The new tariffs from Washington are threatening to trigger more trade tensions with the EU, which will double the burden on the global economy that is already slowing due to growing trade conflicts around the world.
Cecilia Malmstorm, EU trade commissioner said the imposition of tariffs was “short-sighted and counterproductive” as the EU would be able tocdo the same in the Boeing case.
“The mutual imposition of countermeasures would only inflict damage on businesses and citizens on both sides of the Atlantic, and harm global trade and the broader aviation industry at a sensitive time”, she said.
In the end, the US and Europe could avoid a war of mutual tariffs and painful losses if they reach a deal to settle their dispute.
But first, they need to stop blaming each other for the failure to avoid tariffs and immediately begin serious negotiations to solve the problem.