Jumpin’ ju-ju bones – The Trump administration via U.S. Trade Rep Robert Lighthizer and Commerce Secretary Wilbur Ross won a massive $7.5 billion award as an outcome of the World Trade Organization agreeing with the U.S. against the EU and Airbus subsidies. The WTO arbitrators decision is final and cannot be appealed.
This win sets the stage for President Trump to deploy $7.5 billion in countervailing duties against products from the EU. Keep in mind, a final WTO ruling means the EU cannot retaliate against any WTO-authorized countermeasures. The downstream ramifications are very significant. Think about it: at 25% the U.S. could tariff $30 billion in EU goods.
Man, talk about serendipitous timing… But first, here’s the press release from Robert Lighthizer:
Washington, D.C.– The United States has won the largest arbitration award in World Trade Organization (WTO) history in its dispute with the European Union over illegal subsidies to Airbus. This follows four previous panel and appellate reports from 2011-2018 finding that EU subsidies to Airbus break WTO rules.
Today’s decision demonstrates that massive EU corporate welfare has cost American aerospace companies hundreds of billions of dollars in lost revenue over the nearly 15 years of litigation.
“For years, Europe has been providing massive subsidies to Airbus that have seriously injured the U.S. aerospace industry and our workers. Finally, after 15 years of litigation, the WTO has confirmed that the United States is entitled to impose countermeasures in response to the EU’s illegal subsidies,” U.S. Trade Representative Robert Lighthizer said.
“Accordingly, the United States will begin applying WTO-approved tariffs on certain EU goods beginning October 18. We expect to enter into negotiations with the European Union aimed at resolving this issue in a way that will benefit American workers.”
The award of $7.5 billion annually is by far the largest award in WTO history—nearly twice the largest previous award. The Arbitrator calculated this amount based on WTO findings that EU launch aid for Airbus is causing significant lost sales of Boeing large civil aircraft, as well as impeding exports of Boeing large aircraft to the EU, Australia, China, Korea, Singapore, and UAE markets. Under WTO rules, the Arbitrator’s decision is final and not subject to appeal.
The United States today has requested that the WTO schedule a meeting on October 14 to approve a U.S. request for authorization to take countermeasures against the EU. Pursuant to WTO rules, the WTO will provide this authorization automatically at that meeting. The EU is not allowed to retaliate against WTO-authorized countermeasures.
The tariffs will be applied to a range of imports from EU Member States, with the bulk of the tariffs being applied to imports from France, Germany, Spain, and the United Kingdom – the four countries responsible for the illegal subsidies.
Although USTR has the authority to apply a 100 percent tariff on affected products, at this time the tariff increases will be limited to 10 percent on large civil aircraft and 25 percent on agricultural and other products. The U.S. has the authority to increase the tariffs at any time, or change the products affected. (read more)
Macron’s Merlot, Merkel’s Mercedes, Conte’s Chianti and Johnsons’ Johnson are all quivering. Trump, Lighthizer and Ross can pick and choose whatever products they choose to designate the countervailing duties upon; they can mix-and match; they can shift and change; they can assign and withdraw; and there’s not a single thing the EU can do about it. Remarkable… ‘leverage‘,… oh, this could be lots of fun.
Ambassador Lighthizer has already made a list of products for the countermeasures. Varying products with varying tariffs. You can read the full list HERE (pdf). Reuters has an outline on some of the products, and the responses from Europe.
WASHINGTON (Reuters) – The Trump administration slapped 25% tariffs on French wine, Italian cheese and single-malt Scotch whisky — but spared Italian wine, pasta and olive oil — in retaliation for European Union subsidies on large aircraft.
The U.S. Trade Representative’s Office released a list of hundreds of European products that will get new tariffs, including cookies, salami, butter and yogurt – but in many cases applied to only some EU countries, including German camera parts and blankets produced in the United Kingdom.
The list includes UK-made sweaters, pullovers, cashmere items and wool clothing, as well as olives from France and Spain, EU-produced pork sausage and other pork products other than ham, and German coffee. The new tariffs are to take effect as early as Oct. 18.
The U.S. Trade Representative’s Office said it would “continually re-evaluate these tariffs based on our discussions with the EU” and expects to enter talks in a bid to resolve the dispute. (more)
What makes this even more excellent is the timing for Brexit. If Boris Johnson can get out of the EU without strings Trump can use these WTO-authorized tariffs to position a UK trade deal with the U.S. as a trade superhighway. Incredibly this WTO decision plays right into the hand of President Trump’s global trade realignment.
KORUS (Korea-US) is in the books; phase one of the U.S-Japan agreement is in the books; the North American USMCA is complete – pending ratification; the EU previously agreed to purchase U.S. beef exports; and President Trump has been working on a post-Brexit UK-US bilateral trade agreement. The timing for this WTO decision is, well, perfect.
China and the EU have devalued their currency in an effort to block the impacts from President Trump’s trade realignment and the ‘America First’ trade policy.
Because those currencies are devalued against the dollar, the resulting effect is a rising dollar value. That’s the stupid hypocrisy of global banking outlooks. They make a decision to devalue their currency, which causes the dollar value to rise, and then turn around and blame the U.S. dollar for being overvalued. The root cause of the devaluation is unaddressed in their argument.
The EU (specifically Germany and France) and China are trying to retain their global manufacturing position and offset the impact of President Trump’s tariffs by lowering the end value of their exports. However, it’s a never ending spiral – and the U.S. consumer cannot save the world.
In the bigger picture this is why President Trump is the most transformative economic President in the last 75 years. The post-WWII Marshall Plan was set up to allow Europe and Asia to place tariffs on exported American industrial products. Those tariffs were used by the EU and Japan to rebuild their infrastructure after a devastating war. However, there was never a built in mechanism to end the tariffs…. until President Trump came along and said: “it’s over”!
By putting tariffs on foreign imports he has counterbalanced the never-ending Marshal Plan trade program and demanded renegotiation(s). Trump’s goal is reciprocity; however, the EU and Asia, specifically China, don’t want to give up a decades-long multi-generational advantage. This is part of their fight.
No-one, ever, could take on all these interests. Think about it… The EU, Asia, World Bank, International Monetary Fund, China, Russia, U.S. Chamber of Commerce, Iran, U.S. Congress, Wall Street, the Big Club, Lobbyists, Hollywood, Corporate Media (foreign and domestic), and the ankle-biters in Never Trump…. All of these financial interests are aligned against Main Street USA and against President Trump.
Name one individual who could take them on simultaneously and still be winning, bigly.
They say he’s one man. They say they have him outnumbered. Yet somehow, as unreal as it seems, he’s the one who appears to have them surrounded.