Airbus hit as new US tariffs come into force | Hacker News Reader

Airbus hit as new US tariffs come into force

simpleflying.com

127 pointsbillfruit209 comments

If this is similar to the old tariffs, it affects only new aircraft. Some airlines were already buying Airbus planes from Europe and flying them in South America long enough for the planes to be considered "old" so that they may be excluded from the tariffs.

You have to admire the out-of-the-box and absurdity of that solution. Someone actually sat in an office and realized he could save money by letting aircrafts decay in South America before using them.

Laws create absurd situations.

In Canada, it was cheaper for pizza companies to buy cheese with pepperoni from the US than buy cheese here.

https://www.betterfarming.com/online-news/feds-close-pizza-c...

"The cheese in the kits should be classified as a dairy product and be subject to the 245.5 per cent tariff for cheese products that are subject to duties"

I knew we were subsidizing the dairy industry in Canada but this is an insanely high tariff.

In the US, imported Ford Transit vans go through customs, and then the rear seats, seat belts, and windows are torn out. All to avoid a tarriff instituted by Johnson in the 60s to retaliate against Europe for instilling tarriffs to avoid the US dumping cheap chickens on them.

https://www.washingtonpost.com/business/economy/the-strange-...

I hope we can one day talk about cheese on HN. That entire industry survives on tariffs and government handouts.

I think it does in every country.

tarifs don't matter in France. Why would i buy a foreign cheese if I don't like it, even if it is cheaper? e.g. I rarely buy gouda because I find it less tasty than a comté or tome, but it is foreign and cheaper!

Right?! There is probably some import team at United who is tasked with minimizing buying cost and a budget in the millions.

I'd think this kind of thing gets discovered organically. Airlines constantly buy and sell planes. South American airlines will notice that they can sell couple-year-old aircraft to the US for good money and upgrade to brand new Airbuses at hardly any cost to them.

"Among the goods to see an impact from the widened net of additional duty are European made wines, which will attract a 25% duty, and French and German-made aircraft parts, attracting a 15% tax."

As a French person, I can't help but feel like there's some sort of personal attack happening there. Wine and airplanes? Hey, I think you guys forgot to tax cheese and sarcasm while you're at it!

Let's hope that a new US administration will figure out healthier ways to trade with the EU, but I'm not holding my breath since these petty fights have been going on for more than a decade and more than a US president anyway.

edit: Funnily enough, there are some pretty bitter replies to my message. I'll remind all the preemptively angry commentators that I called the whole process "these petty fights" because it's not unilateral (not just the US taxing stuff but the EU too, as is literally pointed out in the article).

They are upset at France taxing tech companies. The targeted attack is very much intentional and intended to be a tit for tat.

Except tech companies pay almost 0 taxes in Eu, while wines etc. were already @ 14%, raised @ 25 %. Also tech companies have no competition in the EU, while wines and planes have competition in the US.

Trade wars aren’t about fairness, they’re about leverage.

Fairness would be no tariffs at all and no taxes that effectively act as tariffs because there’s no comparable domestic competition. Life isn’t fair though.

I don't know about no tariffs beig the fairest model.

One reasonable thing to impose tariffs on is products made with slave labor, or labor paid at less than the minimum wage in your own country. The benefits are twofold, disincentivizing slave labor in other countries, and incentivizing local supply.

> One reasonable thing to impose tariffs on is products made with slave labor,

Surely products made with slave labour should be banned outright?

But this is more of an issue of human rights than trade parity between nations. No tariff is the simplest ground case for discussing different parities.

Any artificial restrictions on trade that we impose domestically, like minimum wage, or occupational health and safety requirements, are meaningless if we have no way of placing those restrictions elsewhere. I would argue exactly the opposite of what you have said, that tariffs are the natural way of expressing these restrictions internationally.

No, I mean in fairness, no tariffs is about as fair as it gets as far as trade goes.

There are good reasons to impose tariffs otherwise. Slavery is a good reason, and the counterparty-country being a communist dictatorship is another good reason. You want to start a list?

More generally, I think you could call tariffs "fair" that seek to keep companies in your market from being punished by compliance with the regulatory environment. In an increasingly "liquid" global trade market, tariffs can let you regulate businesses in your country to a higher (read: more expensive) standard (be it to protect labor, the environment, consumers, shareholders or IP) while protecting the compliant business (and industry as a whole) from being undercut by competitors in countries that don't have those protections.

If effective, there can be a second order effect that pressures other countries to raise their standards as well.

Nah, I think that’s conflating fairness to the business environment with fairness in trade.

The fairest trade is where two people walk away after an exchange with both people feeling like they made out well in that exchange. Tariffs are a form of state interference in these exchanges because to import my fancy cheese, I have to pay more than the fair market value and shipping costs, I have to pay for a tariff as well. I just want my fancy cheese to go with my domestic wine, I don’t want to pay more than I have to for it.

Now if the tariffs on both sides of the metaphorical pond sum out to zero so that imports on both sides paid about the same in tariffs, that’s fair, but that’s rare. Tariffs aren’t about fairness though.

Now if you want to impose tariffs to be fair to the businesses operating in your regulatory environment, well that’s fair, but that’s a different type of fairness obliging a different set of entities.

To be clear, I’m not anti-tariff. My priorities might be different, and all other things being equal I prefer no tariffs to tariffs by default, but let’s not pretend they’re intended to make trade fairer. They’re revenue first, retribution second (these last two may have flipped in the 20th century, but that’s a separate argument to have), and all other effects are tertiary.

It is an unfair requirement that goods produced in your state be made with fairly compensated labor, if there is no similar requirement on goods consumed in your state.

So drop the compensation minimums or put up a political tariff until the compensation minimums in the counter-party-country match yours (if that’s how it ends). Those are your two outs.

Tariffs raise revenue and serve political ends, which can be protectionist in nature or serve some other purpose. That’s fine, as long as we recognize that we’re using them for political ends. The fairest trade of them all is going to be between two people that can make an exchange without state interference and without feeling like the other person got more than they did, and tariffs interfere with that type of exchange.

>The fairest trade of them all is going to be between two people that can make an exchange without state interference and without feeling like the other person got more than they did, and tariffs interfere with that type of exchange.

Why does your definition of fairness include a clause about state interference? I don't think you can argue in good faith about whether or not governments can act to increase fairness if your definition of fairness excludes government action.

Trade will occur at any price between the value to the consumer and the cost to the producer. In a perfectly competitive market, the agreed upon price approaches the cost to the producer, and it will necessarily be the case that the consumer got more from it. Is that fair?

This is going to sound condescending, and I'm sorry about that, but you should consider adopting a principled set of economic beliefs rather than one based exclusively on your politics.

Trade won’t occur if the costs incurred from government or State action increase the price to a level I am unwilling to pay, or else get me to reconsider a producer or service provider that doesn’t incur these additional costs. State interference isn’t a non-factor you can dismiss out of hand, honestly it probably is present in most transactions, but tariffs introduce an additional cost that specifically targets foreign producers and providers.

> This is going to sound condescending, and I'm sorry about that, but you should consider adopting a principled set of economic beliefs rather than one based exclusively on your politics.

I appreciate the consideration and that is good advice. If I had more time I would go back and re-read what I said to see if there’s anywhere my politics and economics appear to be blending together because I do actually try to keep those separate.

Primarily what I’m arguing here, or intending to be arguing are terms from a mostly neutral perspective, it’s still my perspective, so not entirely neutral.

With all due respect I enjoy reading discussions where people are agreed upon on what they are discussing, and tariffs are one of those discussions where words like “fair” get thrown around in several different directions, and inherently they are not fair and not intended to be fair. They serve a purpose, a revenue generating political purpose, maybe even several political purposes, and when words like “fair” get thrown around in such a manner, it really ruins the discussion because it’s not a discussion: it’s a tactical game of obfuscation played by whoever influenced the participants views most strongly.

So let me quote myself from a different comment chain. Perhaps you will still perceive my economics and politics to continue bleeding together; I think any considerations of economic policy are going to have some level of politics in then considering what is being discussed is a form of policy, but I haven’t put forward any explicit policies today.

> To be clear, I’m not anti-tariff. My priorities might be different, and all other things being equal I prefer no tariffs to tariffs by default, but let’s not pretend they’re intended to make trade fairer. They’re revenue first, retribution second (these last two may have flipped in the 20th century, but that’s a separate argument to have), and all other effects are tertiary.

I would say that you're talking about how tariffs are imposed at the moment, which is a different question from "do there exist tariffs which increase fairness?".

The tariff imposing party always feels justified in their actions and can tell themselves this is “leveling the playing field”.

How does the counter-party nation feel about the tariffs imposed on their exports?

You’re right to bring in why existing tariffs exist, there’s always a reason, but when fairness is the cited reason, what you are really talking about is a retaliatory tariff. “Fairness” is the rhetorical justification when people ask why the fancy cheese is more expensive than it used to be; “our cheese is worse” and “it costs them less to make it” are just harder sells.

How about forced labor for inmates?

Add it to the list, but I think that’s encompassed in “slavery”.

To elaborate on what others have said re: retaliation, EU tariffs on goods are generally higher than those of the USA[0], so if anything this will just close the gap and make total tariffs paid more even. The USA in general has the lowest import tariffs on goods of all major countries (even after all the Trump escalations). It also has a large goods import gap (importing much more than it exports). It makes up a lot of that gap in services, so when France passed a tax specifically targeting its most important "service" companies (internet giants), it sees that as a HUGE trade escalation, even though that absolute tax those companies pay in Europe was previously laughably small in absolute terms.

One could argue that despite all the headline drama, evening US-EU goods tariffs and making US tech companies pay taxes in Europe lands on a more equitable arrangement, rather than de facto subsidizing EU agriculture and US tech.

[0]It's hard to find intuitively meaningful numbers for this stuff since it's so complicated, but you can see that the EU "general goods" tariff has a mean average of 5.1% vs 3.4% for the USA here: https://www.wto.org/english/res_e/booksp_e/tariff_profiles20...

I guess that means good news for Australian wine producers, since they can move the inventory designated for China to the USA as there should be some more demand for it.

It is retaliation against GDPR and tax lawsuits

It's funny to hear about "fairness" from EU, when it also tries to weasel out of tariff agreements with so called "anti-dumping measures" [0] and, after that attempt has failed, now it tries to do the same with "carbon tax" [1]. The latter is sold to public as a care about climate change, but as argued by many in reality it's simply a new form of tariff in the ongoing world trade war to offset serious inefficiencies brought by wide adoption of solar and wind energy with simultaneous drastic reduction of nuclear capacity.

[0]: https://www.reuters.com/article/us-trade-wto-eu-russia-idUSK... [1]: https://www.wto.org/english/news_e/news20_e/good_11jun20_e.h...

It was a reality check, not looking for fairness, you cannot compare apple to oranges. In that case I would have spoken about the Italians, who do not produce any plane, nor tax any big tech, but their wines and cheeses are fu*ed no matter what. Also the US consumers should not be happy to pay more for good quality food. Regarding your points you’re probably right, but I hope that without trump, the rest of the world will kind of revert back to more fairness.

There is probably more to that - does the current administration really bother with tech companies? Or is it a move to further (a) deteriorate relations before the new admin takes over or (b) create leverage for upcoming trade talks?

It seems unlikely that the aircraft parts part has anything to do with that, given this:

> They come as the tit-for-tat battle over aircraft subsidies continues to escalate. Both Boeing and Airbus are accused of taking government subsidies to support their businesses, and both Washington and Brussels have won cases at the World Trade Organization to levy tariffs in response.

Occam's razor says we should go with the hypothesis that something that fits in perfectly with the ongoing actions both sides have been taking in a long running active dispute is probably part of that dispute.

Trade wars are fun like that.

Hopefully cooler heads prevail after the wine industry in France gets their politicians to back down.

Unfortunately Europe pays for its inability to develop a strong tech echo system, so no matter what, Europe will always depend on US for any tech related product, there is no way out, but negotiate.

> As a French person, I can't help but feel like there's some sort of personal attack happening there. Wine and airplanes? Hey, I think you guys forgot to tax cheese and sarcasm while you're at it!

Unless it comes from the proper region of the Ohio River Valley, I'm afraid it's just dry sparkling wit.

That would be the new world narrative yes.

However, the word comes from the Greek σαρκασμός (sarkasmós) which is taken from σαρκάζειν (sarkázein) meaning "to tear flesh, bite the lip in rage, sneer"[0]

Greece being in the EU, I think the EU has a pretty good claim to it!

Alternatively, the English version of the word is definitely coming from the UK. Admittedly, most of the dry wit in the world comes from the perfidious Albion, so they too might have a claim when it comes to common usage (and perfecting the art of it). I'm afraid the Ohio River Valley will be stuck with calling it XXL sparkling wit.

[0] https://en.wikipedia.org/wiki/Sarcasm

Ahh, but it's never really been about where a particular thing arose, has it? Few people think wine or cheese were invented in the EU. It's about where they have taken on a distinct form and become essential to the culture.

I fear you are correct in that the UK has a strong claim on all counts here. That said, I think the Ohio River Valley has a distinctive form of sarcasm to the bone-dry wit of Albion.

the thing takes its name from the place, rather than the place taking its name from the thing though, so sarcasm can stay as sarcasm, and you can call the Ohio River valley wit something more specific

According to Dutch news [1] the EU and the US have been in a trade conflict for years now, with the EU previously (in November) instating its own tariffs on American aircraft parts and agriculture products.

[1] https://nos.nl/artikel/2362596-vs-komt-met-heffingen-op-fran...

>As a French person, I can't help but feel like there's some sort of personal attack happening there. Wine and airplanes? Hey, I think you guys forgot to tax cheese and sarcasm while you're at it!

Didn't the EU do the same thing with their retaliatory tariffs a few years ago? They were taxing some uniquely "american" goods, eg. harley davidson motorcycles.

Actually, most EU tariffs are rather poorly targeted. China is much better at making sure the pain is felt in very specific states and congressional districts to ensure that the message is delivered. Harleys, like wine, is generally considered a luxury good and so makes an easy target.

What's preventing the EU from being more targeted like this? Is it the collaborative deliberation (EU) vs. single-party rule (CN)?

Is targeted tariffs something the G8/WTC doesn't like/promote?

Its unseemly to directly get involved in US politics by targeting specific congressional districts to send a message. That's the sort of stuff many Americans were outraged about after the 2016 election.

To be honest I am not sure. From what I have read you were right on the first guess. When China applies tariffs it is a single political body making the decisions, while the EU needs to deal with a lot of different national interest groups all applying to get the benefits of tariffs for their product or service. Back when Trump started doing his initial rounds of tariffs and inviting reciprocation from China and the EU the Economist had a nice map that showed the regions impacted by the tariffs from the EU vs. China. The EU tariffs were all over the place and a lot of them hit west coast areas that competed with the EU but had little impact on the decision-making, while the Chinese tariffs looked like a 2016 electoral map. (The latter was probably helped by the fact that China imports more cereal grains from the US than does the EU so they had an easy way to hit midwest and great plains states.)

I don't think wine is seen as a luxury good in most of Europe. Pretty big part of the local culture in most countries (at least France, Spain, Germany, Italy).

I think they meant in the country imposing the tariff. Wine is definitely perceived as more of a luxury good in the US than it is in Europe.

That was symbolic, I think for something Trump did. It probably didn't even had a real impact on Harley Davidson sales in Europe.

It was chosen because many know the brand, escalating a trade war would be stupid for both sides.

It was targeted at specific congressmen iirc, wasn’t Kentucky (McConnell?) targeted through a bourbon tariff?

Doesn't the EU already have very high tarriffs on a lot of things imported from the US? Cars for example?

I recall that when Trump started taxing European steel, the EU looked for companies in Republican states that were seen positively by Trump supporters and sniped them with extremely specific tariffs.

Harley Davidson was one of these companies. They weren't doing well before they got caught in the middle of this trade war, since the "biker" culture it aimed at was shrinking globally, so in a move to survive they decided to move production to South America. Turns out their audience didn't like this move, and its death accelerated.

TL;DR: Trump put a tax on European steel, and the EU snipped Harley Davidson in retaliation.

Trade wars do tend to be bad for everyone involved. Like rent control, it's very hard to find any economist that will even support it.

> killed Harley Davidson in retaliation

Their stock price (even over five years) doesn't appear to reflect this.

That's because the company started dying longer ago.

Their stock price today is around 30$. In the early 2000s it was around 90$.

Also, like the other comment mentioned, HD has been playing a lot of financial tricks over the last 20 years to prevent the stock price from declining (e.g. buy backs to artificially inflate stock price, take a look at the number of outstanding shares: https://www.macrotrends.net/stocks/charts/HOG/harley-davidso... , a reduction from 280 million to 150 million in the 2005-2019 time period).

EDIT: I recommend https://www.youtube.com/watch?v=EOwxxsPaogY for a summary.

HD was on deaths door anyway even without Trump. They've been playing financial games with production for the past 20 years and their core customers are aging out.

Agreed. The EU tariffs just accelerated HD's decline, but HD dig their own grave long time ago.

HD decision of focusing their brand on a "hardcore biker" culture that has failed (and arguably even alienated) younger customers is what killed the company.

All customers age, but what HD has failed to do is attract new customers at a faster rate than the death rate of their current customers.

Nobody is trying to buy a Ford...

Huh? Ford has a reasonable market share in the EU.

They sell a little under a million units a year there.

https://www.statista.com/statistics/642946/eu-ford-car-sales...

I suspect most Fords sold in the EU are manufactured in the EU or its former member state:

https://en.wikipedia.org/wiki/Ford_of_Europe

Correct, I think only the Mustang, the Ranger and Edge are imported from the US, nice vehicles (especially the Mustang the Ranger) but which don't sell that much in absolute numbers. The rest of their line-up is I think produced in Europe.

Most of Ford's car lineup, even in the US, was designed in the EU (fiesta, focus) or in collaboration with Mazda (fusion). Cars like the Taurus/500/Montego/MKS evolved from Volvo platforms.

Ford is pretty heavily involved in Europe. Cars are bigger in Europe, so Ford cars tend to be developed there, while trucks and SUVs are bigger in America, so design of these vehicles is largely done in America.

And the EU tariffs are a part of the reason for that, though perhaps not the main reason.

Most of those will have been made in the EU though

This is ignorant. The Ford Fiesta for example is a top-five car in the EU. They're everywhere.

https://www.best-selling-cars.com/europe/2019-full-year-euro...

It is very popular in the UK, on the continent you see them less. Ford makes good cars in the EU, the focus is really good, but they are loosing steam..

I mean this is something people from both sides can agree with Trump on. The world has been taking the USA for a ride when it comes to trade. The EU is really defensive , and will protect its industry above else. It does also bully smaller countries (like Tunisia, stop illegal immigration or we reduce trade, etc...); but the US gets most of the bad press.

> The world has been taking the USA for a ride when it comes to trade

This is a function of our China policy and insistence on maintaining the dollar as the world’s reserve currency.

It's genius. French wines are consumed by a tiny portion of Americans, so it basically only affects a small slice of people who don't care if it costs a bit more.

French wine is not more or less expensive than domestic wine; there are cheap and expensive options for both. It does, generally, have a different flavor profile.

I'm nowhere near a 1%er and I strongly prefer the taste of old world wines. Count me among the annoyed.

That’s BS. Plenty of people care that it costs more. It also hurts American distributors of French wine as well, many have had their businesses suffer as a result of this stupid trade war.

Wine is weakly fungible. Specific wines, not so much, but I believe that the category of French wines can be effectively cross supplied by domestic American. Demand for wine should, in theory, shift there.

>I believe that the category of French wines can be effectively cross supplied by domestic American

For the majority of the population, maybe. But for people that actually care about wine, this couldn't be farther from the truth. It's kind of like saying that domestic American whiskeys are roughly equivalent to Scotch.

Sure, not denying that, especially for the more hardcore wine aficionados out there. That's why I said weakly fungible, and not perfectly. However, I do believe that the intended result will happen still, and there will be a shift of spending from French -> US domestic.

It's bad for the consumer, but that applies to anything that isn't fully free trade.

As an American, sarcasm doesn't register as something associated with the French to me. Something along the lines of snobbish perhaps.

edit: not condoning either take...

because you really think I'm rich ?

(this is meta comment, don't be offended)

I don't really understand this. But no, not rich snobbish. Just francophone snobbish.

if we import the wines and the airplanes, the next most French thing to import would be revolution. I suspect that is the problem. The US isn't very interested in good cheese or pointed sarcasm, its challenging to the palate.

I hope these good revolutionaries will find fine cheese, wine and ethically sourced gourmet food consuming bourgeoisie activists, especially those at tech companies, to be eminently suitable for summary execution in first round.

Customers of airlines that already own Airbus planes will pay the tariffs, and they aren't particularly going to stop flying them over the prices of parts, so…

Wine is probably less directly pointless to charge a tariff on, but if the tariff is on the import price, it won't particularly be a big piece of the retail price, and it will be paid by the person buying the wine.

We are taxing ourselves to own the French!

there is no reason to reduce tariffs in the immediate future and tariffs are typically a long term function for them to work. the true winners of this is embraer, Bombardier, and a few others.

Driving a wedge between us, eu is laser focused by many non eu, us companies due to the amount of possible market share gain. China is coming out with their own air transport company as well as a few other industries.

So really it is US, EU vs the world in some of these interests.

This is not new, it's also in lieu of actions that happened some 17 years ago:

"In 2004, the US argued that the French, Spanish, British and German governments had handed out loans to Airbus at interest rates well below market standards. The WTO ruled in favor of the US and decided that, as compensation for the damage caused to the US aviation industry, Washington could impose as much as $7.5 billion (€6.34 billion) worth of European exports. The decision principally affected products from Germany, the United Kingdom, France and Spain."

https://english.elpais.com/economy_and_business/2020-08-13/u...

Lest we forget that EU also has high tariffs on US cars, and other exports.

Isn't the the fall out from the trade dispute over subsidies that the US won?

And is it possible the EU settled this trade dispute, because it established precedence for ruling on these kinds of trade disputes..

I'm not expert on this, but recalling here this tale told in a different light.

In either case, as a European I'm not sure I mind tarriffs as a response to unfair subsidies when the subsidy practice has been ruled unfair by WTO.

That door swings both ways. And if we've been unfairly subsidizing airbus I guess this is fine.

Ahem! https://www.nytimes.com/2019/11/01/dining/best-cheese-rogue-...

I heard they have good wine and apples, too ;->

Liberté, Égalité, Puérilité!

/me just shrugs and thinks more and more of Idiocracy, Planet of the Apes, and so on.

I don't think we forgot to tax sarcasm, we just like the English more than the French </sarcasm from a yank>

We're all hopeful that things will get better when we have an actual adult in charge of America. Sorry on behalf of the rest of us for the mess that we've made of things. We're trying to fix it!

Dude we make our own cheese. You can get a kilogram for just a few bucks and any warehouse store. (lol)

Compare it to this rudimentary map of the most well-known French cheeses though: https://vinepair.com/wine-blog/map-the-iconic-cheeses-of-fra...

It's a sad state of affairs indeed. It is is annoying that tax companies will be taxed so aggressively.

There's a middle ground in a lot of things but it seems like Europe is becoming very antagonistic with aggressively taxing US tech companies.

US tech companies had about 10 years to properly pay their taxes, if anything, the US government should be happy it's happening so late.

The tax is a countermeasure for the loopholes tech companies use to avoid paying tax here.

I suggest fixing the loopholes.

Easier said than done.

Either by intentional design or by lack of resources, both EU and US govs have a hard time winning this game of whack-a-mole when these megacorps have armies of top lawyers and consultants who's sole focus is finding legal ways to avoid paying taxes.

That's kind of what has been done, they have now a turnover tax, which is much harder to avoid.

The EU has to come to terms with it. The EU consists of small countries each of which have a long tradition of being the safe house of dictators, black/drug/war/bribe/stolen money, shell companies, tax havens.

None of them want to give up these privileges, until now that is. Now that these are starting to have an impact at home, they have just started cleaning up.

Interesting that it happens with France and wine. Not so long ago France decided to raise VAT on (Belgian imported) beer but not on (France fabricated) wine. Of course that had absolutely nothing to do with protectionism.

Except they did nothing of the sort.

They just decided to tax all alcoholic beers as alcohol, and thus the same as wine. Before that beers with very low alcohol content were treated as non-alcoholic beverages, which enjoy a lower VAT rate.

Makes no difference to Belgian beers, and France does produce quite a bit of beer as well (same or more than Belgium).

The French VAT is 20% on all alcohols. It doesn't make a difference between wine and beer.

EDIT: Sorry, everybody, I am indeed completely wrong here.

I thought that by merging in the EU you would be a giant who would "balance the US and China" ? :)

Oh by the way, note that by leaving the EU, the UK is effectively NOT impacted by those, ie. it is a direct trading advantage.

Ah yes, the famous Brexit wine is ready to be exported the world over. /s

I expect Biden to photocopy the Trump trade agenda, and all indications are he will do exactly this. Not just with the EU, but China as well.

Boeing is a major employer, union stronghold (still), and in rough shape. It would be political suicide for Biden to throw them under the (Air)bus just to blanket-reverse every Trump-era policy.

If you punch the US in the gut with tariffs you may get reciprocation.

Let me rephrase it for you:

"If you don't let us steal every bit of income we can while operating in your countries where your local companies don't have a value larger than the GDP of Switzerland or Mexico, then we will get angry at you for figuring out ways to make them pay the taxes they should pay. So we'll make sure to prop up our Boeing that is failing due to issues unrelated to you, and we'll slap random luxury goods taxes on it for some luck"

That's petty alright.

As pointed out elsewhere, the EU put taxes on Harley Davidson a few years back following the taxes on steel from the US. That was petty too.

FWIW same thing happened with Canada in the last few years with new tariffs both ways. Mostly petty too.

Maybe one day we'll figure out ways to try and nurture making everybody grow together rather than making everybody lose more. For all its faults, the EU is an attempt at that (internally, because we've got to start somewhere).

Yes, because history shows that trade wars are good and easy to win!

What if the trade war was already going on, and we just refused to fight it? I think that only benefited a few people. The Walton family, for example.

If other countries are propping up their industries, and we fail to respond, that's a disadvantage. There are also national security concerns. It's not all of one or the other, but there may be a balance and that's worth exploring further, I think.

Sure, but what do you expect the US to do? The EU could just not do what they’re doing. It’s very clearly a reaction from the US to an action by the EU.

American wealth and prosperity is higher than it's ever been.

If the vast majority of Americans are not benefiting from it, it's because of the concentration of wealth within US driven by domestic American policies, more than anything else.

That doesn't have anything to do with trade wars though?

Trade wars are great: https://www.bbc.com/news/world-us-canada-43336529

You may want to tell that to France.

Do you disagree that tech companies should pay taxes for the money they gain in a country?

They are currently following EU law and France has decided to go rogue and tax them on their own.

The EU is not a country nor a federation. Companies that want to operate in EU countries need to abide by each countries laws. The EU just provide a minimum set of laws that must be abided by all countries, but that's pretty much it. Each country uses these laws as a base, and provides its own super set of laws on top.

The EU doesn't really have many tax regulations, so a country like Ireland might think "How else will I attract industry here?", and decide to allow companies to put a mailbox there in exchange for operating in the EU tax free.

This double-screws all other countries, first, because these companies pay zero taxes, so their tax contribution to the EU is zero. Second, because Ireland remains poor, because these companies pay almost zero taxes, so other countries need to send them money.

France didn't like this, so they introduced a tax that both French and non-French companies must pay (it is illegal in the EU to discriminate by country, so this tax affects French companies as well).

And that's pretty much it. This tax is high because it needs to compensate for the lack of taxes these companies pay in France, and for the money France needs to send to the tax heavens in which these companies operate.

TBH I hope other EU countries will follow France's example, and that at some point, when most countries have these rules in place to avoid getting double-screwed, the EU as a whole can agree on a set of regulations to forbid tax heavens within the EU.

Such a set of regulations needs a pretty high buy in from all EU countries (essentially unanimous consensus), and countries that cannot otherwise attract industry are incentivized to be against it.

With these new taxes, Tech companies will be more incentivized to move to the places in which it makes most physical sense for them to be, instead of a freaking mailbox in the artic. At that point, the incentive from Ireland and other tax heavens will be small, since there won't be any point for companies to move there in the first place.

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Also, while the EU usually negotiates as a front, the EU itself is a union, so it has little to absolutely no power over what any EU country does. Within the union, you have federation republics like Germany, presidental republics like France, monarchies with kings like Spain, and... without really stretching it... some EU countries aren't even democracies and are more like dictatorships. Point being, getting something done at the EU level requires widespread consensus, but the EU is extremely heterogeneous and consensus is really hard, which is why the EU gets nothing done, and why each country does whatever it wants. The EU doesn't even have a constitution.

It might be easy to criticize, e.g., the federal response to COVID in the US, but that's because people actually expected a Federal response to it, because there could have been one. In the EU, the federal response was almost non-existent, but nobody expected any because the EU has no power to do anything in this case. I don't really know whats worse.

That's fine. With the tariffs China has slapped on American (93%) and Australian (200% !) wine Europeans have what is now the largest international market (and growing) all to themselves.

In fact the US have tried to prop up (and placate) their wine producers since that because the Chinese market completely dried up for them. So I see these tariffs on European wine as killing two birds with one stone for the US government but not necessarily hitting European producers that hard (as said, at this point Chinese will buy as much wine as Europeans are able to sell them...)

It speaks to how politically unsophisticated the response was, it's not like Napa was some bastion of Trump support. I guess they like the valley products more than grapes.

The US has screwed itself so badly in the international arena it's not even funny.

It's gone from leading the world to being able to barely find 1-2 supporters in UN resolutions. I mean, it can barely find 2 countries of the tens of countries with populations smaller than Staten Island to support its resolutions in the UN.

The major problem for the US is that the administration has declared war on everyone, including allies. So it doesnt find any support, even from allies, because even if they agree with the US's action, they are worried that it will come back to bite them.

A classic example of this is that Trump spend years railing about China but only imposed tariffs on them more than 2 years into his administration. In the meanwhile, within months of assuming office, he had already imposed tariffs on Japan, much of Europe, Canada, Australia, etc...basically, all allies. So when time came to impose tariffs on China, none of the American allies were prepared to support the US, which meant the US had to go alone in imposing tariffs that turned out to be pretty ineffectual (China's net exports to the US are higher than ever) and further, have damaged US exports to China considerably by forcing them to find alternatives to American supplies (Brazil for soyabeans as an example, which had the wonderful knock on side effect of accelerating the destruction of the Amazon...).

The US is one of the least trade dependent countries: https://www.oecd-ilibrary.org/docserver/sti_scoreboard-2011-...

Exports make up a small percentage of the economy, so it can afford to place high tariffs on imports to help develop domestic industries.

With the Chinese economy growing more important by the day you would think that the US would try to keep trade with Europe (i.e. inter-dependency) as high as possible instead of basically encouraging them to strengthen their relation with China... And as it happens the EU and China have just signed an investment treaty, which goes in that direction.

Certain European wines under 14% ABV, whiskies, cheeses and other agriculture products have been levied a 25% import tax by the USTR since October 18, 2019.[1][2]

[1] https://time.com/5704663/trump-tariffs-whiskey-wine-cheese-e...

[2] https://www.decanter.com/wine-news/us-eu-wine-tariffs-100-pe...

Did American cider stocks go up because of this?

Wikipedia has a summary of the history of this shitshow:

https://en.wikipedia.org/wiki/Competition_between_Airbus_and...

The irony is that Airbus has also lost a lot of money because of the US sanctions against Iran which wasn't even supported by the EU.

Is this an attempt to prop up Boeing from collapse? Really lame solution if so.

Boeing will never be allowed to collapse as it's the US's only competitor to Airbus and a major defense contractor.

Should just nationalize it then. Otherwise propping up a company like that is anti-freemarket.

It kinda already is right? Many of their defense contracts end up being practically blank checks.

Freemarkets exist in fairytales.

Please don't take HN threads on generic ideological tangents. There's nothing new to say about any of them and they inevitably degrade as they go—perhaps because the mind looks to conflict to amuse itself in the absence of any new information.

Yes, the GP comment went halfway there but that's not a good reason to go the whole hog.

https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...

That doesn't seem to answer why we don't just nationalize it.

What makes you so sure the government would do a better job at running Boeing?

Are there any examples where a nationalized US organization is doing better than it's private industry counterparts?

737-MAX issues aside, Boeing is doing very well in just about every other aspect of their business, which is quite vast in scope. Everything from rocket ships to commercial airliners that aren't 737-MAX variants...

Because that's a commie move.

It looks much better when you just keep investing in it. Plus shareholders get to make money off the taxpayers in the process.

Partial nationalization exists - Airbus is a good example.

When your biggest customer is the government, it's a more stable approach than the half-assed privatized approach which really means more corruption.

Yawn. Sure, like any ideal. I feel like you thought this would be revelatory. There exists a spectrum, I'd like to see us lean freer. Or at least not do weird back handed crony capitalism and just come out and nationalize.

Yawn. Sure, like any ideal. I feel like you thought this would be revelatory.

Ditto for Airbus.

One of the risks of consolidation.

The EU subsidized Airbus for decades to enable it to compete with Boeing. China does the same with many of their industries. Japan and Korea did the same before them. Every country has an interest in having strong industry.

> Every country has an interest in having strong industry.

And if you don't already have one and have to incentivize someone to take on that challenge, that makes sense.

If you already have _several_ manufacturers, the last thing you should do is allow them to consolidate down into a single monopoly.

The US has played it's hand exceptionally poorly.

Yes, the US's industrial policy over the past several decades has been a disaster that squandered most of the benefits we accrued from being the only major country that didn't have to rebuild after WWII.

I don't disagree. One thing that came to mind the other day, as I remembered how a family member of mine lost their job at a national airplane company. Their job prospects were very slim and required moving across the country. The industry is very specialized. I dislike tariffs as much as the next globalist but I do feel for family. Conflicted, you might say.

This sounds like welfare with extra steps

Well yes, but this way you're only giving welfare to some highly skilled people (plus useless execs) who also happen to be useful in wartime. Not the kind of people you want to loose long term.

The EU also subsidizes Airbus, agriculture and other critical industries.

More people can become the kind of people who are useful in wartime if they aren't struggling to survive.

Agreed. Unlike other countries, the USA are allergic to the word "welfare", so they have to go through all these convoluted steps to do the same thing

The more extra steps the more ethically murky it gets.

Is creating a regulatory environment where public infrastructure construction and maintenance prices soar to astronomical levels because you have three people getting paid hourly to supervise one guy who's running a pavement miller "welfare" or is it crony capitalism for the construction industry?

I'm fine with welfare, but thinly veiled handouts to politically connected groups seems a hell of a lot less efficient way to better society than just directly funding or tax-incentivizing homeless shelters and food pantries. Also some of the shadier cases of "well if you put a positive spin on it then this is just welfare" behavior are too graft-like for my tastes.

It's to penalize AirBus for being propped by France and Germany, supposedly.

Wine and liquor got caught up in the mix somehow too.

It's all due to digital taxing companies like Apple, Google, Amazon.

France put in a 3% tax on digital services, some other countries did it as well. The EU as a whole plans to do a 3% tax on all digital services in 2021.

The US is angry about it, since all the major tech companies happen to be american.

>The US is angry about it, since all the major tech companies happen to be american.

And chineese. This new Whatsapp thingy would have been another disaster in Europe if we were not protected by the RGPD.

Whatsapp is owned by Facebook though?

I'd still get off of it and have been recommending Signal or Telegram to anyone that listens.

Chinese media tech companies don’t do much business outside of China. Alibaba already gets taxed as a retailer. Zoom actually sells something.

> it's all due to digital taxing companies like Apple, Google, Amazon.

Citation needed.

Isn't this just part of: https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds316_e...

It is beyond the scope of this settlement?

https://taxfoundation.org/us-tariffs-on-french-goods-digital...

And this won't change with the Biden administration since he's been propped up by these very same companes.

Penalizing one competitor in a duopoly is rewarding the other.

I suspect yes, which is why it excludes Japan where large 787 subassemblies are made.

I don't know, but it's a complicated question since Boeing uses European suppliers (e.g. Safran) and has its own manufacturing operations in Europe.

Edit: Actually, the factory I'm referring to is in the UK.

I wonder how taxing aircraft parts works. If United reacted to this by flying all of their Airbus aircraft to the EU for any major overhaul would they be taxed on the way back?

Or just to Mexico/Canada.

> The tariff will have a significant effect on production of the Airbus A320 in Mobile, Alabama, something which Airbus has claimed will only hurt US workers.

How will this hurt US workers?

Sounds like this is suggesting that either they will pay the workers less to compensate, or maybe even move the factory elsewhere to avoid the tariffs (moving the factory to mexico might mean the tariffs disappear until new tariffs against shipping planes from mexico get approved, which might take some time).

That’s assuming that all the planes manufactured in Alabama are not exported outside the USA. E.g. to airlines registered in Mexico, Canada, S America. I imagine that at least some are exported so moving manufacturing outside the USA would definitely hurt employment.

IIUC the goal of the Alabama factory is to work around the existing tarifs on shipping planes to the US. Instead of shipping the planes, Airbus ships the parts, and assembles them in the US, thus avoiding the plane tarifs. So now there are tariffs on "plane parts".

Maybe they'll just stop doing this, close the factory, and ship whole planes from the EU again. Depends what the difference is in the plane and plane parts tariff, and whats more worth it.

Let's just say hypothetically the French government was propping some serious money into Airbus and wine industry that makes the United States not able to compete at all. What is the most effective way for the US to respond? Prohibit imports? Slap tariffs like now? Buy a serious amount of Euros? Pump even more money into the US industry? Or some sort of other alternative?

Conflict resolution mechanisms in the WTO are a very sensible solution to trade disputes, if parties actually adhere to the rulings and do not sabotage the decision making bodies.

Clause 2 and 3 of your statement here seem to be taken for granted.

Take the free stuff?

That would create unfair competition for local production, though.

Starbucks, Amazon & other big chains/companies have used that strategy in the past: sell at a loss locally, turning a profit elsewhere, until there are no competitors left. Then ramp the prices back up (and above).

Invisible hand fo the market is steering the wheel, nothing we can do

This is the exact opposite of that...

It was sarcasm...

I don't think it was.

Poe's law.

It was sarcasm of course

Won’t this just mean Airbus planes are serviced in Canada and Mexico instead, costing American jobs? I mean with Boeing having issues are Airbus really going to lose business over this type of short term stupidity (from both sides).

If the whole Covid situation taught us something it's that we need to be more independent of other countries and encourage local production of many goods. Tariffs sound like an easy way to do just that. Tax imports, help local producers. I don't see the problem tbh. All those free trade models ignore the scenario of everyone getting dependent on one exporter and then that exporter either going rouge or having problems and not being able to meet the demand anymore.

I am very surprised by tariffs = war sentiment. It's just a way to have some protectionism. It works and is needed. Where is the problem?

> It works and is needed. Where is the problem?

The problem is, tariffs don't really work. Not in the long-term.

Tariffs can hurt local producers too. If a company is just so efficient at producing good that they can produce cheaper products inclusive of the tariff, then the local company has no chance. They have no hope of expanding outside of their local markets and they will eventually give up.

Most of the time, tariffs merely act as extra profit margin at the expense of the local economy. So the local company has no incentive to improve. So, in the long-term, tariffs on imported goods are are effect way of destroying local industry. It often drives the competition to fiercely optimize their production, making them substantially more competitive on a global market.

The only time tariffs are effective at protecting a market, is when that market only exists locally, not globally. Thus, preventing any producers from gaining efficiency on the global market before tackling a domestic one.

If you want the government to prop up a local industry, get the government to purchase a large volume of goods from them at a fair, but highly-competitive price. Then the producer has incentive to optimize production because they know exactly how much they can save each year. Decades of small incremental improvements add up.

Your argument again misses the issue of security. Yes, tariffs hurt efficiency on a global scale and they hurt consumers in your country (as they now will have to spend more to get the same goods they could have get cheaper). Creating or keeping less efficient industry gains in scenarios where foreign actor you depend on for imports stops meeting demands (either on purpose to hurt you or if disaster like a pandemic hits). It's a trade-off between efficiency in a perfect world and security in a real one.

Great news for China: a EU/US trade war.

Hopefully US and EU relations will improve in the coming years. Performing these type of actions between such close allies is just mind boggling.

I don't think this really signifies a meaningful deterioration - this has been happening forever. Its diplomacy by trade policy. The EU does the same to us, we do the same to Canada, Canada does the same to us. Usually the penalized industries are just propped up with subsidies in the targeted country anyway. If anything, trade wars were more vicious a century ago than they are now.

In most of these nations, the measures have strong support. You can't expect a Canadian farmer or French wine maker to put the concerns of Americans above their own economic interests. I highly doubt homegrown EU-tech companies were at all bothered by recent measures against US tech giants.

There are concerns, especially in regards to the legality of Office 365.

"You're hurting your people with dumb tarriffs, making American-made anything more expensive to your population??? Oh yeah? Well, WE'RE GOING TO HURT OUR PEOPLE WITH THE SAME ILL-CONCEIVED PLANS!"

Meanwhile, the people:

"Ouch. Please stop. If you can't stop the other government from hurting their own people, can you at least stop hurting us, government?"

Next election: let's vote for the same people who hurt us. They said they wouldn't this time.

If that's the price of reigning in US tech giants, so be it. Make planes and flight more expensive, in fact, please tax flights heavily and introduce a yearly limit. Then, use that money to expand the train network and promote it for long distance travel.

Maybe something good will actually come out of this instead of dumb posturing.

What does the United States do when facing the challenge of dealing with a rising China ? Alienate the EU by placing tariffs on them driving them right into the arms of China. Looking at recent events it really does seem like the US is losing its way.

It's a long series of tit-for-tat tariffs and subsidies. Not particularly novel and has persisted between multiple administrations.

Honestly, I'm surprised it took this long following the WTO ruling: https://www.cnbc.com/2019/10/02/wto-rules-in-favor-of-us-in-...

Sure but the context has changed.

Yes. It was still pretty much just a Boeing vs. Airbus dispute arbitrated by the WTO until the EU did this: https://www.capitalpress.com/nation_world/agriculture/eu-imp... in response to the US trying to implement the aforementioned WTO ruling.

Lovely. Because aviation, especially general aviation, isn't expensive enough already.

Actually it’s remarkably cheap considering the environmental impacts.

How are goods valued when it’s transferred across borders within the same organization? Parts from France to be assembled in Alabama aren’t necessarily “sold” so don’t need a value. How are tariffs calculated then?

Airbus Americas, Inc. headquarters is located in Herndon, Virginia. The parts are 100% sold.

Is that the case for all assembly taking place abroad? i.e. is that a requirement for being able to do the export/import, that the importer is a US company? Even so, what forces them to charge for it at all? If Airbus says a plane hull is $10 who challenges that?

If the hull costs the US company $10 but $1m to manufacture, who covers the loss? There is a loss of profit so airbus needs governmental bail out. The US has now two reasons to be further upset. Or do I see it wrong?

Airbus America should switch to paying a substantial 'licensing fee' to Airbus SaS, in return for which they can use the trademark and also receive compatible parts for $1 each...

Those would be most likely different SKUs. The parts have to be still imported and money would have to change hands.

If I raise you an invoice and you raise me an invoice, we can’t pay them by simply offsetting them.

Looking at the list https://en.m.wikipedia.org/wiki/List_of_exports_of_the_Unite... there is nothing the US had that Europe can't get somewhere else.

And no Wonder USA imposes tax on Europe since the country is absolutely economically fucked.

Perhaps reading the article instead of just pulling stuff out of nowhere would be helpful to making a salient point.

This has nothing to do with economics, which the USA is still doing better on a measure of GDP than then EU, hell even California alone does better than everyone but Germany.

It’s a tit for tat retaliation since the only tech companies France wants to tax so heavily are American.

It seems kind of strange to see such big changes a week away from the next term. Is there anything preventing Biden (whoever is in charge of this) from reverting this tariff on January 20?

Isn't it a 15% tax on aircraft parts (the 25% tax is on wine)? The first sentence of the article is "The United States is, from today, levying a 15% duty on imported aircraft parts coming from France and Germany."

The submitted title was "US imposes 25% Tarriff on importing aircraft parts from Europe". Submitters: please observe the site guidelines, which include: "Please use the original title, unless it is misleading or linkbait; don't editorialize." One reason we have that rule is to avoid errors like this one.

https://news.ycombinator.com/newsguidelines.html

Tariffs don't hurt the producer as much as the consumer. But stupid politicians will tell you otherwise because they think they are smart!

How do you maintain wage and standard of living differentials with the rest of the world when transportation is as cheap as it currently is without a productivity gap, tariffs, or a carbon tax (increasing transportation cost) to make local manufacturing more attractive?

Besides, there are big strategic reasons to maintain a strong domestic aerospace industry, even if it increases costs in the short run.

Like Adam Smith pointed out, the ideal set-up is to maximize imports and minimize exports. This will make your nation richer over the long run.

If you do that, don’t you have to essentially export money? Which can then be used by your counterparties to buy up your nation’s productive assets, and diminish the effective savings of your populace via asset inflation?

Also, aggregate wealth of a nation isn’t the only thing we should be targeting. You can increase the overall wealth while simultaneously demolishing the wealth of the large portion of your populace involved in domestic manufacturing.

Can you explain this a bit more? If there's a tariff on a component, wouldn't the buyer look for cheaper domestic replacements? So maybe a mix of both -- they pay more in the short term, but it gives domestic suppliers a better chance to win the business over the long term?

It depends on whether there's a local alternative and whether it's desirable.

The key thing is whether the product is fungible.

A Boeing part isn't going to be useful to repair an Airbus owned by a US carrier.

Looks like this and the recent actions are simply a big middle finger aimed at the new administration. Try to revert them and you will be labeled as a weak leader who values foreign interests more than domestic ones (i.e. you will anger and radicalize the MAGA crowd even further), leave them in place and your relationships with affected foreign countries will continue to be sour.

Meanwhile the eu is undercutting its own industries by making free trade agreements with china. Hey germany needs to sell their obsolete car tech somewhere.

Edit: of course there is a downvote. The incels must be quite annoyed at facts. EU industries will pretty much succumb.

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