The punitive tariffs on Europe on January 12, although imposed in the Trump era, are probably far from the “final battle” of the U.S. trade war.
January 11, the Office of the United States Trade Representative and the United States Customs and Border Protection announced that tariffs would be imposed on some goods from France and Germany.
This may be the last “tariff stick” Trump waved to EU countries before leaving office on January 20.
The United States and EU countries are questioning each other with tariffs.
The decision was first announced by the chief U.S. trade negotiator, Lighthizer, on December 30, 2020, and the new tariff policy will be in effect from January 12, 2021 Eastern Time.
Specifically, aircraft parts (including fuselage and wing components) from France and Germany will be subject to a 15% tariff, and French and German wines with alcohol levels above 14°, sparkling wine (excluding champagne), distilled wine, and some cheeses will be subject to a 25% tariff.
The Boeing-Airbus dispute between the United States and EU countries over civil airliners has lasted for many years. The two sides refused to give in to each other and questioned each other on the grounds that “the other implements state subsidies”. In 2004, the United States took the European Union to the WTO arbitral tribunal on this ground, and a year later the European Union also concocted it.
After Trump came to power, he turned to the “simple and rude” method of solving the problem by using tariff barriers. Since 2018, he has imposed a 25% tariff on European wine exported to the United States, and the European Union has also counterattacked with tariff barriers.
In October 2019, the United States and Europe both won the WTO complaint, which means that the United States can impose a total of $7.5 billion in tariffs on European products exported to the United States, but Europe can also impose a total of $4 billion on U.S. products exported to Europe. Due to the inconclusive negotiations between the two sides in recent weeks, it eventually led to the “latest blow” of the United States.
In addition to civil aviation aircraft, trade relations between the United States and Europe have become increasingly tense since Trump took office. The “Transatlantic Free Trade Agreement” has been delayed for a long time, but the United States has successively carried out many tariff barrier “surprises” on the EU, while the European Union is stepping up the implementation of the “digital tax” directly pointing to Internet giants, which is generally regarded as “the key point of the United States”. .”
The infuriated Trump and Lighthizer once said that they would impose a punitive tariff of 25% on French handbags and suitcases exported to the United States from January 6 this year in retaliation for France’s active promotion of the “digital tax”.
Due to the emergency of Trump’s zeal supporters hitting the U.S. Capitol on January 6, the Office of the U.S. Trade Representative announced on January 7 that it would “suspend” the collection of punitive tariffs on French handbags and suitcases exported to the United States, which once convinced many people that the so-called “air passenger tax” on January 12 may not arrive as scheduled. Come on – obviously, they are wrong.
Trump’s tax increase policy is “not flattering inside and outside”
On the eve of leaving office, Trump and Lighthizer are still racing against the clock and working overtime to implement punitive tariffs against Europe, which will undoubtedly cause great trouble to their successors.
Conversely, if Biden soon lifts these newly added tariffs after taking office, Trump and his supporters will already be ready to “tray the interests of American citizens” hat and smash it.
However, the American business community and consumers are not necessarily able to receive Trump’s “love”.
In the case of Airbus aircraft, 2020 is the “small year” for civil aircraft delivery due to the epidemic. Even so, Airbus, located at the final assembly plant in Mobile, Alabama, United States, still delivers more than 40 A-320 passenger planes to customers. Although the increase in tariffs will not affect the assembly of passenger aircraft at Mobile’s final assembly plant in the short term, it will greatly increase the cost of passenger aircraft assembled by the factory and the price in the long run. Competitiveness.
The problem of alcohol is even greater. As Anev, president of the American Wine Trade Union, said, a year and a half ago, the first round of “25%”, mainly digested by American importers, intermediaries and catering retail companies, rose only 5% to 7% in the price of Fardish wine in the U.S. market, which was barely acceptable.
But now that time has changed, the coronavirus epidemic has led to the bleak operation of high-end liquor terminals such as catering, tourism and bars, and it is no longer able to digest the second round of “25%” increase in tax costs.
California and Arizona industry have made sharp rebuttals to Trump and Lighthizer’s argument that “this will promote the production and sale of wine in the United States”.
Jarasvi Roger, a Tucson winemaker and founder and partner of CircoVino, said that its sales fell sharply in half in 2020 due to the epidemic and epidemic prevention response, and “tax increase is equivalent to a series of attacks”.
Data from the American Wine Trade Union also confirms this conclusion: after the “first 25%” landed in 2019, French wine exports increased by 2.77% year-on-year – because its exports to China increased by 35% year-on-year.
Biden may not cancel the additional tariffs imposed on the outside world.
At this moment, the U.S. catering and liquor operators, which have been most affected by this round of additional tariffs, are jointly writing to Biden’s “shadow government” to urge him to “return as soon as possible” after taking office.
However, this may not be realistic.
On January 11, some senior trade experts and jurists in the United States participated in a symposium on whether Biden will actively eliminate tariffs imposed on foreign products in the Trump era. Participants almost agreed that it is not necessarily.
Several experts pointed out that Biden and his team remained silent about whether to remove as many as 232 “trade war tariffs” of the Trump era after November 3 last year. People close to its team pointed out that the reason is to hold on the “t-won results” as much as possible, and on the other hand, to bargain with trading opponents.
In fact, the Democrats are more enthusiastic about tariff barriers than the Republican Party, and the “old veterans” in Biden’s team may not be able to resist the pressure of populists in the party to “protect their own labor”.
Events on January 6 and subsequent have strengthened the concept of “information autonomy”, which means that the “digital tax” will be more common and severe, not the other way around. This also means that there are still a large number of “explosive points” of trade disputes between the United States and the European Union.
In this case, the Biden team’s wishful thinking of “wanting to keep tariffs and improving trade relations” is probably impossible.
In other words, the punitive tariffs on Europe on January 12, although imposed in the Trump era, are probably far from the “final battle” of the U.S. trade war.
