The US government announced this this afternoon. It’s 10% on aircraft and 25% on other EU “industrial and agricultural products,” including “Irish and Scotch whiskies; wine, olives, cheese; as well as certain pork products [OMG! Prosciutto??], butter and yogurt,” to take effect Oct. 15. The World Trade Organization authorized the US to impose tariffs on $7.5 billion worth of EU goods because of subsidies to Airbus.
This may kill my business. We rely on German malt to make our beers, and we haven’t found a North American substitute (the German is already more expensive) that is worthy.
But Airbus has been directly subsidized for many years. I always wondered why the US just ignored that. And China is and has done the same - directly pump state money into enterprises so that they could compete with other countries.
More importantly though, tariffs have never been shown to work well long term - Jefferson found that out, and American Airlines, JetBlue, Frontier, and others are flying Airbus planes. So why tariff cheese instead of those planes?
The tariffs are not across the board, I suppose because the WTO ruling only allows retaliation up to $7.5 billion. They seem targeted to put pressure on particular countries (e.g., lots of German industrial products).
Products that may be of concern to Berserkers:
French, German, Spanish and British (!) wine under 14% (note: not Italian, Portugeuse or Austrian)
Single-malt Irish and Scotch whiskies
Liqueurs and cordials
Spanish olive oil and olives
Cows milk cheese from pretty much anywhere in Europe
Spanish and British sheeps milk cheeses (e.g., Manchego)
“Prepared or preserved pork” from anyplace in the EU (presumably covering prosciutto and speck)
Currant and berry fruit jellies
Section 7 – Products of France, Germany, Spain or the United Kingdom described below are subject to
additional import duties of 25 percent ad valorem:
2204.21.50 Wine other than Tokay (not carbonated), not over 14% alcohol, in containers not over 2 liters
The EU has argued for years (I think for two decades or so) that Boeing benefits from subsidies because its defense aircraft contracts help underwrite development of civilian aircraft. So it wasn’t as simple as “they subsidize, we don’t.” And I believe that the EU governments have curtailed their subsidies to Airbus over the last 15 years or so, as the company grew bigger and more solid. Since Airbus was formed with government support so a European company could compete with the likes of Boeing and Lockheed, it was hard for the British, French, German and Spanish governments not to keep supporting it.
Obviously in direct response to the Bloomberg article published today about how Kerrygold Irish Butter is now No. 2 in butter sales and whipping every US entity in growth among US consumers.
Lockheed does not make civilian aircraft. Airbus has been struggling in recent years because it is a multi-government entity. Every decision is political, from where the top officers come from to where things will be built and who will be the second and third level contractors. Whether the decision makes sense financially or whether the proposed C-level exec is really the best candidate is very secondary to the decision. I, for one, hate to fly Airbus planes because the overhead space is so limited, compared to Boeing planes.