Trump's trade war takes on the EU
Just another spin on the sad tariff merry-go-round
The smartest insight and analysis, from all perspectives, rounded up from around the web:
The White House is about to expand the trade war by slapping tariffs on French wines, Italian cheeses, and Irish whiskies, said Emre Peker and Josh Zumbrun at The Wall Street Journal. The tariffs, to be imposed Oct. 18 on $7.5 billion worth of those and other goods imported from Europe, will be "the most significant trade action against the EU since the Trump administration hit the bloc with steel and aluminum duties last year." In addition to a 25 percent tariff on foods, the levies will cover jetliners, which get a 10 percent duty, and industrial equipment. The EU will almost certainly retaliate against American imports, adding more uncertainty for businesses trying to navigate President Trump's multifront trade wars. Unlike Trump's other tariff actions, though, in this case the U.S. actually got the green light from the World Trade Organization, which authorized the tariffs last week after ruling that the EU had long given Airbus illegal subsidies. Airbus' rival, Boeing, had been pursuing that case since the Clinton administration, said David Gelles at The New York Times. The WTO's ruling is essentially "the largest-ever authorized retaliation in the organization's history." But there's a caveat: The U.S. had already been found to be propping up Boeing in the exact same way. The WTO is expected to authorize similar retaliation for that matter next year, setting up another spin on this sad tariff merry-go-round.
Europe can't pretend it was blindsided, said Bryce Baschuk at Bloomberg. This case has been a decade and a half in the making, and "while some may bristle that the self-proclaimed 'Tariff Man' is expanding his trade fight with the European Union, Trump would be acting on the right side of international law." Furthermore, Trump has the explicit authorization of the foremost "referee of global commerce." But that referee — the WTO — didn't need to rush to Boeing's rescue, said Jon Sindreu at The Wall Street Journal. "It isn't clear anyone was truly wronged in the first place." The case was based on the idea that the EU's illegal aid to Airbus cost Boeing billions every year in lost sales. In reality, "the Airbus-Boeing duopoly has proved to be fiercely competitive" — and good for both sides. "By trying to fix what isn't broken, the WTO risks creating a more Balkanized market in which Boeing sells in the U.S. and Airbus in Europe" — while handing an opening to China's state-backed airplane maker, Comac.
Politicians need to set their nationalist trade squabbles aside, because the world economy is beginning to buckle under the weight of them, said the Financial Times in an editorial. Polls of the services sector in the U.S., the U.K., and Germany in recent weeks "confirmed one of the biggest worries for economists: the contraction in manufacturing." Part of the reason, undoubtedly, is the U.S. trade war with China, which is contributing to China's slowdown and also hurting Germany, Europe's economic linchpin. Coming full circle, "the global weakness is now dragging down the U.S. economy too," as American factory activity is growing at its slowest pace in a decade. If decision makers don't "step away from the edge and de-escalate the trade conflicts," a U.S.-EU trade dispute could tip the teetering global economy over the edge.