After calls for talks from the EU and the UK, now a key voice in the US suggests we might see progress in the airplane tariffs squabble.
If this trade confrontation was a human, it would be old enough to drive (in the US). Nobody likes it, both sides (now all three) suffer from it and want it gone. And yet it persists. This is the airplane tariff war between the two sides of the Atlantic. But maybe some progress really is close. This optimism comes from statements of Katherine Tai, the expected appointee for the position of US Trade Representative.
If you’ve missed the details of the exciting (…) airplane tariffs war across the Atlantic, here it is in a nutshell. Starting from around 2004, Boeing was accusing Airbus of getting subsidies for some of its designs. Initially it was the A380, later there were complaints about the A350 as well. With the first tariffs coming, the European consortium accused Boeing of getting tax breaks from Washington State.
A Blame Game?
After the threats came the tariffs, and counter-tariffs. Soon the matter started escalating, when new tariffs appeared, for things that definitely aren’t airplanes. Machinery, whiskey, orange juice, fruit, wines, cheeses, olives and nuts, somehow became relevant to it all. The World Trade Organization (WTO) had to intervene, with one or the other side claiming that conditions had changed.
Frankly, the whole affair has long since become more than a bit silly. Delta even found a way to deal with it, that matched the overall tone of the situation. But it’s certainly not a laughing matter. Tariffs are no longer just about airplanes. They involve many industries, with many millions of people depending on their outcome. And if it wasn’t complicated enough, the UK’s EU departure means it now has a separate stance. The British have stopped imposing some tariffs, but still suffer their impact when it comes to aircraft. They hope to be able to mediate in this crisis.
In the last few weeks and months, many voices have been calling for a de-escalation of this affair. All sides know that when they impose tariffs to each other, the only ones who gain are those out of the game. So when it comes to airplanes, the winners of the US-EU tariffs are aircraft makers in Brazil (Embraer) and China. OK the latter is more theoretical, as would be Russia.
Do All Sides Now Agree On Airplane Tariffs?
So, what has changed? The new US President nominated Katherine Tai, as the new US Trade Representative. In her confirmation hearing before the Senate Finance Committee, she had to answer questions regarding multiple issues. Of course the most pressing tariffs-related issue in the US at this time is about China, not the EU and airplanes. But she did get a question about this matter. After observing that it has caused the collapse of the WTO’s dispute settlement system, she added:
“If confirmed, I would very much be interested in figuring out, pardon the pun, how to land this particular plane because it has been going on for a very long time.”
This is an interesting statement. We have heard many similar statements in the last few weeks. But they all came from EU or UK officials. The US side has been quiet about tariffs on airplanes and other goods. This of course is understandable. The new US government would not like to be seen to be caving in to European pressure. However with officials on the east side of the Atlantic calling for a cease-fire first, perhaps the US side can afford to reduce the pressure.
Time will tell. We’ve certainly spent enough of it already!