To me, the whole situation is a schoolyard example of "having your cake and eating it too".
> Arch-rival Airbus has swooped from the wings to grab majority control of the C-Series and proclaim that the 300% tariffs can be side-stepped via the simple remedy of conducting the final assembly of planes destined for US customers in Alabama.
So, how much of a final assembly counts as final assembly? I remember a story of how Chinese shirtmakers circumvented tariffs against Made in China shirts: they sent the body of the shirt and sleeves to Hong Kong, workers in Hong Kong sewed the sleeves onto the shirt, slap "Made in Hong Kong" on it, and problem solved...
Apparently I'm not the one asking this question: http://www.chicagotribune.com/business/ct-biz-airbus-bombard...
> "There is a legal question of how much of the parts and components and value-added needs to actually happen in the U.S. for tariffs to no longer apply," said Chad Bown, a senior fellow with the Peterson Institute for International Economics. "You can't just fly an airplane to Alabama and say it's made in America."
Then, over the border the finished, packaged products go, tariff-free, under the auspices of NAFTA.
Separately, I'll mention that I've heard commentary on Canadian news to the effect that the Provincial and perhaps National governments provided assistance -- not taking an ownership stake; rather, direct financial assistance -- to Bombardier to aid in development of the jet.
To the extent that expected returns, financial and employment and whatever, are now leaving the Province and Canada, this leaves those governments out in the cold and deprived of expected returns. I don't know all the details of this, and perhaps what I heard was biased, but it was described at length and very critical e.g. of the governments not having built greater assurances into the aid they provided.
From the article: "a second assembly line for the 100- to 150-seat plane will be set up at Airbus's facility in Mobile, Ala., so the plane can be sold in the United States"
By the way, I'm convinced that a big reason that small car manufacturing has moved to Mexico is the list of free trade agreements they have.
That's what this attitude results in: trade war.
Without free markets you end up having worse products win which is bad for everyone.
It's not only the quality of the products that compete, it's living standards, health laws, worker protection, environmental protection, social welfare, healthcare, educations and human rights that compete.
If I live in a (economically) large enough country that trades with another country that fail providing reasonable levels of all of the above for their own people, mostly to the gain of some oligark or another, there is little reason to offer totally free trade.
An optimal tariff, possibly even invested back in the originating country - or even used to fund healthcare or education - is most likely globally less maximized in term of number of cheap items per dollar, but could still help stimulate both economies, maybe help the poorest, and hopefully avoiding a race to the bottom for the 99%.
[edit]... This doesn't mean that a 300% tariff on airplanes is justified between EU, US and Canada. Or maybe we in EU can fund your healthcare if you just buy from Airbus in the future...
Canada has single-payer ("free") health care, and plans to introduce a national carbon tax. There's a narrow socio-economic gap in school results[0].
Tell me again how the United States has better health care, environmental protection, and education?
But I think the problem is more related to China, India and other upcoming "tigers".
But economically and in terms of good foreign relations, definitely. Closing the gates in such an overtly hostile way to foreign businesses competing with your home grown ones hurts international trade, and ultimately that can end up badly for everyone over the long term, even if it brings some short term benefit.
The jury's out on this one. The effects international free trade can have on existing industries can be devastating as jobs are rerouted from rural manufacturing areas to the neighborhood of transshipment ports. The US since the adoption of NAFTA has resulted in a sharpening of the divide between rural America and the cities, and has brought mass poverty, unemployment, and associated ills to communities that were previously dependent on protected factory jobs. And although new jobs have been created in the cities, these jobs have been fewer, higher paying, and requiring a different skillset.
As a result of free trade, we therefore have: (1) higher unemployment, (2) higher concentration of wealth, (3) a great migration that has disrupted rural and family identities, and (4) increased instances of opioid and meth additions and related problems (violence, burglaries, etc.) across the board but especially in those same "left behind" communities.
But hey, our GDP is up. So by the only metric economists look at, I guess it was a success.
Proponents of the United States variety of capitalism preach and espouse (or at least used to) free trade as both gospel and a kind objective truth while ignorant (at times on purpose and at times sufficiently unaware) of how big business and the government are bedfellows scratching each others backs (big sugar, the corn lobby, big oil, the automakers, other agribusinesses such as dairy, telecom, Silicon Valley and other tech companies, the military-industrial complex, and commercial aviation to name just a few: Boeing straddles the last two industries).
In comparison, Canada has more hybrid approach somewhere between a market economy and a command economy practically necessitated by the confluence having a large land area, a relatively small population, and an economic, cultural, and military powerhouse for a next-door neighbour. And yes, similar sort of mutual government/business back-scratching does occur in Canada. However, most if not all of the policies that Canada has is mostly to prevent itself from being economically and culturally drowned-out/overwhelmed (do notice that I left out militarily). In spite of the investments that the various levels of Canadian government make, they readily allow foreign investors and corporations to buy or merge with large, iconic Canadian businesses after assessing the impact through mandatory reviews much like US Congress does (Molson Coors, Target buying Zellers from the Hudson's Bay company, and Wendy's merging with Tim Horton's, Tim Horton's later repatriating itself, then merging again with Burger King.
TL;DR There is nothing inherently wrong with looking out for your own best interests. But, there is something wrong with the pot calling the kettle black (hypocrisy).
https://en.wikipedia.org/wiki/Molson_Brewery
https://en.wikipedia.org/wiki/Molson_Coors_Brewing_Company
https://en.wikipedia.org/wiki/Zellers#2010.E2.80.932013:_Lea...
And that is a big problem (among a boatload of others) with the current American administration. It is not America First but America only. That with no consideration for their "allies" or applying a different set of standards to others...
In this case the Trump administration wanted to protect Boeing against Bombardier by denying access to a key market, making Bombardier's entire C-* project unprofitable. The outcome (so far) is that Airbus/Bombardier can still make the airplane and export to any country from either Canada or the US, whichever has the best trade conditions. This does not sound favourable for Boeing's export business.
AIUI this isn't an unusual outcome: A government wants to protect domestic business against imports, accidentally hurts its own exports and offends someone in the process. The domestic business may be its best interest but that's hardly obvious.
No. However, "best interests" can get very complex when considering the subsequent reaction of other parties - please see the iterated prisoner's dilemma.
[1] The 'light house customer' metaphor was a favorite of Chris Bennet's at NetApp. They were a customer that if they adopted your product, others in the same business would see your product as a "safe harbor" and would be willing to buy your stuff too. The unwillingness to be 'first' in an industry where one plane represents a big chunk of capital is strong.
The hypocrisy is strong with Boeing though. Boeing's received over $8 billion in tax breaks (errrr subsidies) from the state of Washington alone.
https://www.seattletimes.com/seattle-news/boeings-historic-t...