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Friday, April 23, 2021

Is this the most imbalanced trade dispute in modern history?

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Reuters’ chart on European airplane manufacturer Airbus vs. U.S. manufacturer Boeing puts in perspective how the competition between the two goes far beyond the matter of fighter jets:

EBAUDE FROM THE SAUDI ARABIA’S MODA

In April 2017, U.S. President Donald Trump threatened to impose retaliatory tariffs on European aircraft maker Airbus if the European Union retaliated against Trump’s metals import tariffs. In a tweet, he accused Airbus of having received subsidies from Germany, France and Spain, a charge the company denies.

In response, in May 2017, the European Union enacted provisional retaliatory tariffs on a number of American goods, ranging from Indiana cherry jam to bourbon. The president was not pleased, tweeting “We don’t let them sell their great products into the U.S. without paying massive tariffs and non-reciprocal taxes. If they retaliate, they are just showing that they are weak and I think that will do far more to adversely affect them than to help them.”

TWO CITIES ON THE MOVE

Meanwhile, on the ground, some parts and services for plane production are entirely sourced from abroad, including avionics, paint, bearings, metallurgy, and electric power generation and distribution systems. Some of the tools that Boeing and Airbus use to design their aircraft. Airbus launched its “Made in U.S.A.” campaign last year.

LET ‘EM FIGHT

The EU’s move to issue retaliatory tariffs is not unprecedented. The EU placed hefty tariffs on some U.S. goods in 2002 in a tit-for-tat trade dispute, the customs agency CBU reported. In 2010, the European Commission imposed sanctions on American political and trade organizations over allegedly discriminating against foreign firms and products, as well as censuring America for using the World Trade Organization as a tool for its pressure campaigns on Russia and Iran. U.S. lawmakers then threatened to hit EU vehicles, wine, and sugar, and the spat escalated into a full-blown trade war that required the European Commission to negotiate a mutual release from the sanctions.

But it could happen again. With a Republican-controlled House and Senate, there is less incentive for the United States to intervene in such a trade dispute. Trump is free to support or oppose any sanctions, or spur or stifle them at any time. As New York Times columnist Thomas Friedman noted last year, “When the case against Boeing began in 2006, [Trump] was the chief executive of the Seaboard conglomerate, a company that built chicken processing plants for Tyson Foods in Iowa.

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