The EU subsidized Airbus, which hurt the American company, Boeing. Therefore, all Americans have to pay 25% more for european wines, cheeses, and whiskey. How does this make any sense?
Drops demand for same items, hurting the producers and the countries they're based in, while maybe also diverting consumer money to domestic alternatives (or at least other countries that aren't quite so tariff'd). Right?
Not siding with the tariffs, but that's the idea, no?
I'm no expert, but I'd assume it's to make good on other trade negotiations the public isn't privy to. In regards to the like of the extra $9b free up for US exporters to Japan, mostly ag. Complete and utter hidden... on the front page of the ustr.gov site. Takes a real investigative journalist expert to find. I mean, who would ever look on the same site on China trade deals to find negotiations opening up with other countries...
Hurting Scotch means a better chance for the Japanese whiskey market in the USA. Total random speculation on that. There are lots of other products without Japanese replacement. Especially since scotch is really one of the smallest mattering products in that list. Parmesan, I argue, is a far bigger deal and we'll see that effect more. At least for me.
But, to be fair, after looking into trade relations for a while, Trump isn't as insane as CNN and BBC makes him out to be. I don't understand why everyone makes it seem like he's throwing dice and making decisions in a bubble. I'm starting to think he's making short term pains for long term gains. Which, to be honest, is the thing we should always be doing. Losing in the short term for mid to long term gains is not insane, stupid or crazy. Just... you know, sucks for a while.
On top of that, everyone seems to be a trade-deal expert suddenly because they've obviously negotiated with foreign govs all the time. I'm not and don't claim to be like others on HN and reddit. I just see there's more going on than just China and things don't look as one sided as it's being made out to be. But then again, BBC and CNN, and social media agreed, thought China would dump $1+ trillion in US bonds for pennies on the dollar and lose out on the loan leveraging they get to "punish the US"...by bankrupting themselves? Which never happened anyways. Such great "economic experts" who can't figure out supply/demand market dynamics taught in macro econ 101 textbooks. Same folks are commenting on the trade war. So whatever...
> But then again, BBC and CNN, and social media agreed, thought China would dump $1+ trillion in US bonds for pennies on the dollar and lose out on the loan leveraging they get to "punish the US"...by bankrupting themselves? Which never happened anyways.
There's plenty of hyperbole out there, but hyperbole doesn't negate reality. China is buying fewer treasury bonds, and this is one reason why the bottom fell out of the market for purchasing U.S. treasury bonds, requiring Federal Reserve intervention. It's one, small reason, but it will become increasingly more important as Chinese purchases drop while U.S. deficits continue their upward climb.
The reason you know Trump isn't crazy like a fox is because his policies are inconsistent and erratic. Demanding your investment managers to buy high, sell low doesn't make you Warren Buffett. Starting a trade war with the expectation that the other guy will flinch before you doesn't make you a cunning strategist; it just makes you dangerous.
I dont know, maybe the baby bird needs to be pushed out of the nest too. It's a good way to quit relying on one large source for the bond market. That's inherently unsustainable. Every service provider knows your biggest customer is your riskiest one. If they leave, it hurts. Thus, speed that up in a controllable manner. A few broken eggs sure, but you still keep the hens and the hen house.
"Starve the beast" has been the Republican strategy for decades to kill entitlements. The thinking was that by refusing to raise enough revenue to cover spending, Congress would be politically forced to reduce spending. Of course, what happened and continues to happen is that revenues drop, spending stays the same or grows, and the gap is covered using increasing amounts of debt.
If you're suggesting that the pain of losing Chinese money will force the U.S. to reduce its deficits, that has manifestly not been the case for decades. For treasuries, instead what will happen is exactly what we've seen happen the past few weeks--something or someone will fill the gap before the whole house of cards collapses, which will sustain the status quo but ultimately put us on a more perilous path.
You can't bluff and cajole your way to smarter fiscal and industrial policy. Republicans have tried that and failed because it turns out you can't avoid making hard, considered decisions; nor avoid compromise. There's no avoiding the fundamental dynamics at play, which are complex and merciless. Entitlements exist for a reason. Trade with China exists for a reason. You can't address those things without addressing the underlying reasons they exist. Doubling and tripling down on a failed strategy with the world's worst bluffer isn't going to work any better.
First of, all politicians are greedy, lazy self interested assholes incapable of actually accomplishing anything of real substance of their own two hands. They just have different flavors of bullshit. So you pretending that just blame Republicans and the world is a better place, yea, ok. Its worked out so well for govs in history to blame another party and declare all politics should be based on ours. It's already a waste of an argument.
That and you put the cart before the horse. It's always been to cut spending first so rev wouldn't need to increase.
In theory yes, however you have now possibly hurt foreign consumers of your products such that even in the absence of formal retaliatory tariffs, you may have harmed your export market.
He wants to target farmers because it’s an emotional play against a specific country’s exports...
It’s more tangible than adding a tariff to some obscure machine part because it becomes a pride thing. Also politicians of every country are acutely sensitive to the needs of their farmers.
It's a pretty simple theory -- if Americans have to pay 25% more for certain European goods, then they will be incentivized to purchase those goods elsewhere, therefore hurting Europe. Of course, this assumes the goods are fungible; this could backfire if no suitable substitute exists for those goods.
Single Malt Whisky starts out at a high price point. I do not think that anyone that normally would spend $ on this is going to care. Not quite the correct item to tax. Find something that is not a luxury with an equivalent US product.
> Single Malt Whisky starts out at a high price point. I do not think that anyone that normally would spend $ on this is going to care.
Many high quality single malts are $40-50. Expensive for a daily drink, but within reach as an indulgence. The new tariffs will raise the price of the bottle by $10. That's not terribly significant on it's own, but knowing that buying a bottle contributes $10 on a needless trade war to feed a maniac's ego is pretty irritating.
This reasoning is only correct if the number of sales from rich people far exceeds those from poor/middle-class people. Since the latter group far outnumbers the former, I can't be sure that what you said is true.
And considering Scotch whisky, it comes at a very peculiar time. The EU might be stopping to export Scotch whisky in 4 weeks from now :p. Not sure how this applies to Irish whisky though. As a consequence of the whisky boom of the recent years, the Irish whisky industry had a rebirth.
It gets worse. Boing got (indirect) subsidies[1] to the tune of at least $23bln, says the EU (but denies it subsidizes Airbus and most allegations it subsidized Airbus in the past). And the US even used the Echelon system to spy on European companies including Airbus and gave the information to US competitors including Boing (the EU parliament investigation concluded economic/industrial espionage happened, and former CIA director James Woolsey later admitted to abusing Echolon to spy on European companies).
So both companies are claimed to have received substantial "illegal" subsidies.
This isn't Trump's making btw. This legal battle over subsidies started I think in about 2004, so Trump is the third president involved. But of course, he was eager to jump on it and announce those tariffs now, even before the WTO ruling was finalized.
It just happens to be a very specific market where I would dare to say (and this is just my opinion) most consumers are willing to pay a little more for the real deal, that is, the imported goods instead of looking for "local substitutes"...
Both the taste preference and the "perceived value" are super important in the market for alcoholic beverages.
Maybe a silly question but it seems these big high ticket businesses like Boeing and Airbus cannot provide affordable aircraft and survive without some government intervention and the bar to entry is too high for new players so why not come to some international agreement on how they are supported by government instead?
It's seems better to have 2 manufacturers supported by government than to have only 1 that essentially owns the whole market.
> Myth: Aerospace is different from other industries and requires some level of government support.
> Fact: Boeing has proven otherwise. We have financed all of our new airplane programs without the kind of government handout that launch aid represents.
Boeing doesn't necessarily get direct subsidies but they get hefty tax breaks. Boeing will almost certainly get bailed out by the feds if the MAX or 777X come close to bankrupting them.
> Do you expect Boeing to come out and say they accept subsidies when their whole business model is to sue the competition?
I don't have to, since Boeing already came out and said as much on the URL I posted. They make a distinction between legal and illegal subsidies recognized by the WTO.
On one hand, you have a sclerotic political establishment that at best hasn't figured out that the '90s free trade playbook doesn't work on China and at worst only cares about the WTO for its handy role in policy laundering.
On the other hand, you have this ridiculous flailing, which actually makes the establishment look good. There really is no alternative.
Makes me want to start drinking. But since tariffs are up on scotch, I'll have a bourbon instead.
Is it wrong to set the table for the upcoming negotiations with UK and EU. If you list the tariffs against US in EU, it is not even a debate who is holding the short end of the stick.
> The EU imposes a 10 percent tariff on passenger cars, compared with the 2.5 percent U.S. duty on European autos.
A study by the CESifo Institute in Germany found unweighted average EU tariffs of 5.2 percent, compared with the U.S. rate of 3.5 percent.
“The EU is by no means the paradise for free traders that it likes to think,” Gabriel Felbermayr, director of the think tank’s Center for International Economics, told the German business newspaper Handelsblatt.
Thanks for the link. But isn’t it sort of meaningless to talk about unweighted percentages? If either side applies an extremely high tariff for a product that is rarely traded, then it would have a large effect on the unweighted average, but no real effect on trade (though I suppose you could argue that it can affect single sectors in a devastating matter).
The best numbers I could find are more comparable, namely total US tariffs of 7.1 billion USD on imports worth 684 billion which approximately equals 1% vs EU tariffs of 5.7 billion USD on imports worth 575 which is also roughly equal to 1% [1,2]. To me that seems pretty fair.
However I think the biggest issue (as an EU citizen) is the US insistence on not adhering to EU regulatory regimes, which is what I think made a lot of people oppose the TTIP. Also note that this has not been an issue when negotiating a EU-Japan trade deal.
The US has a 25% tariff on light trucks and 2d SUVs since 1964. As manufacturers tried different ways to circumvent the US government has closed these loopholes. The most famous is Ford Transit vans were shipped to the US with seats in an exempt configuration. In Baltimore the seats were removed before delivery to dealers.
Note, This is a WTO imposed fine basically. The WTO sided with the U.S. when it claimed the EU subsidized Airbus with below market rate loans. The US won the case. The outcome is basically this.
It’s amazing to me the EUs solution to this is to increase tariffs themselves (at least that’s their threat). It would be much cheaper to just stop subsidizing airbus or reduce it to a level where it’s not undercutting Boeing (which is the real target).
The EU alleges the US does similar things with Boeing and in the past those crossed accusations have been enough for neither side to call the other over it. The EU's proceeding with their complaint at the WTO and are probably pissed off that the US didn't back down (especially if their accusations have merit) and are trying to get the US to drop this without having to wait for their own WTO ruling, by talking tariffs now.
EU or no EU, Britain is a prominent member in the Airbus consortium (https://www.airbus.com/company/worldwide-presence/uk.html), and that's unlikely to change despite Brexit. Although I wouldn't put it past Trump to ignore that in order to encourage Brexit, of course...
Since Scotch whisky has a very long shelf life, it seems like if you're in the US then now might be the time to buy a couple of cases of some reasonably in-demand mid-market single malt with a view to flipping them for a quick profit when the price goes up 25%.
> "The US was given the go-ahead to impose tariffs on $7.5bn (£6.1bn) of goods it imports from the EU following a World Trade Organisation (WTO) ruling on Wednesday."
After reading this, I had the stupid question:
Couldn't producers of tariffed goods in an EU country send their goods to a shipping hub of a nearby non-EU country to change the country of origin to avoid the tariffs?
Example: Could or could not Scottish whisky producers send their bottles to be shipped from Iceland to America to avoid the tariffs?
My presumption of the article is that places matter more to the tariffs than the actual goods themselves sourced from anywhere else (?).
That’s what they did for Russian sanctions. We had nice prawns, freshly caught in Belarus. Belarus is a magical place, we also had some oranges and other tropical fruits from there. Suddenly it became a major producer of cheese and so on ;-)
Plus Spanish wines, olive oil, cheese and iberian ham exports valued 1270 million Euro.
I assume that Canada and Russia will keep gladly buying this products as before, and that new channels will open with China and other Asian countries. Is not impossible also that the raise in prices for US citizens would be made permanent after trump interlude by the increase of demand. Is uncertain what will happen.
Is a probable outcome, yup. Or US citizens smuggling products across the frontier, The Simpson's style.
Taking in mind that those are among some of the most faked products in the world I would not surprise if a black market emerges to overcome regulation and somebody became pretty rich selling counterfeits.
Maybe US now will need a wall also in the North, who knows?. Other probably scenery is that a lot of US citizens start self-restricting themselves to consume only US products that is a perfectly respectable option also (but would increase pressure against US nature).
Does the U.S. president claim that the Chinese are paying the tariffs on the EU products too ? I still can't tell if our all tactics and no strategy president understands how tariffs works.
“The US first filed the case in 2004, arguing that cheap European loans for Airbus amounted to illegal state subsidies.“
“The US was given the go-ahead to impose tariffs on $7.5bn (£6.1bn) of goods it imports from the EU following a World Trade Organisation (WTO) ruling on Wednesday.”
The WTO imposed the tariffs against the EU due to a recent ruling.
I think this could be a good moment for us to pause our consumption a bit, and think about buying only what we really need. Not just because of the tariffs but as a signal that we as consumers can pull back when necessary.
I think that depends on how you define extravagance. Actual quality aged parmesan-reggiano imported from Italy is of similar cost to filet mignon by weight at the stores I frequent.
Growing up in an Italian household, I often got in trouble for sneaking chunks off the expensive cheese to be eaten without grating. It was reserved exclusively for grating, or served sliced thinly on special occasions.
Parmesan cheese from Parma is. That was one of the shocking things to me about European stores: there was only Parmesan (or yes, Parmesan-style) cheese from Italy due to food provenance laws, and yes, it was some of the most expensive cheese in the store.
You can actually get many kinds of cheese which is similar to parmigiano in Europe.
Grana Padano is a much less expensive protected hard cheese, and many producers have similar non-protected cheese (Biraghi is a very large producer, for example).
There's usually plenty of mixed pre-grated cheese bags too.
The point is: it's not called parmigiano or parmesan, as that would be cheating the consumer.
That's the excuse, it's more about pleasing the local producers, as Denomination of origin laws generally are. As a consumer, I care much much more about taste and price for the same type of product.
That is, if it tastes the same or better, and is cheaper.... I don't care if it was produced 100 meters from my house outside of Europe, or in the basement of a 1300-year old church in a specific region of Italy. With today's technology, it's perfectly possible to emulate the ambient conditions from the original place in the super controlled food producing facilities.
But the local producers in said region might lose competitiveness or would have to stop pricing it as a "premium" product just because of where it was produced.
So, in my opinion, the concept of Denomination of Origin ends up being a legalized scam, as it end ups cheating more on the consumer, because in reality it doesn't necessarily mean the product is of better quality (as it's often advertised).
> As a consumer, I care much much more about taste and price for the same type of product.
that's great, as you're free to buy any of the things not called "Parmigiano". There's plenty of awesome stuff which is not PDO/PGI.
The only reason you would call something unrelated "parmigiano" is if you wanted to attach yourself to the concept of "premium" without having to follow the same rules.
You can absolutely make a great succesful product and not give a damn about denomination of origin rules.
Bolgheri Sassicaia[0], for example, established itself as a fantastic wine without having an italian DOC(G) classification, until one was defined explicitly for it.
> So, in my opinion, the concept of Denomination of Origin ends up being a legalized scam, as it end ups cheating more on the consumer, because in reality it doesn't necessarily mean the product is of better quality (as it's often advertised).
But that is true of any advertisement. I agree that the basic denomination of origin does not imply quality, but I don't see how removing it improves things.
For a country that spends so much time worrying about government interference in the lives of private citizens the reaction to the government introducing a slew of new taxes on the import and purchases of private citizens has been illuminating.
