12

This question recently asked about the justification for steel import tariffs against China - specifically on the grounds of national security. The answer is through, but also carries the implication that the justification for these tariffs is in national security.

The Trump administration recently announced a new tariff on luxury goods, including wine, scotch and whiskey.

All of these items are clearly not essential to national security - so how is the administration justifying their right to impose these tariffs on the EU countries that export them?

  • 3
    @Benjamin: A state may have the right to impose tariffs (or other taxes), but I think this question is more about how the administration tries to justify these particular tariffs to the voters. – jamesqf Oct 3 at 19:02
  • 1
    @Benjamin A state can impose tariffs, but Article I, Section 8 of the US constitution says "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises", so it is reasonable to ask why the president is laying taxes. – Acccumulation Oct 3 at 21:42
  • @Acccumulation I asked that one a while back. Got a decent answer from it. – Mason Wheeler Oct 4 at 16:30
  • @MasonWheeler That top-voted answer is especially relevant to this - as it's the exact same type of tariff that is being levied in this question. Thank you for sharing it! – Zibbobz Oct 4 at 19:01
17

The recently announced tariffs on the EU are not about national security. They are WTO sanctioned tariffs to offset EU state aid to Airbus, not tariffs that need to be justified under WTO rules.

The US had sought to impose tariffs on about $11bn in goods. Though the WTO cut that figure to $7.5bn, Wednesday's decision still marks the largest penalty of its kind in the organisation's history.

The EU will likely respond in kind as per this related question. Either next year following the Boeing case finalisation, or potentially immediately using previous WTO rulings.

Europe is also looking “at all options,” including retaliation based on old WTO dispute rulings with which the U.S. isn’t complying, though no decision has been made, Malmstrom said, adding that any response would be compliant with WTO rules.

Reuters also mentions a $4bn war chest as referenced in a linked question, which may or may not be the same compliance issue as above.

There has been some EU talk of reviving a $4 billion war chest of tariffs from an earlier case, to be used at once, but this is sure to provoke a new debate.

  • "WTO sanctions that have been allowed but not yet applied." Could you source that please? I've looked into the case but couldn't find any reference to this. – mario mario Oct 4 at 16:23
  • 1
    @mariomario Found some sources for you. – Jontia Oct 4 at 17:30
9

I haven't seen a discussion of how the US administration chose the current list. Keep in mind that they also included a 10% rise in aircraft [but not parts] tariffs, which is clearly directly related to the Airbus case.

The rest are probably selected in a way to inconvenience the Europeans without affecting the not-so-rich US consumers much. We do have a more detailed account (or at least commentary) of how the EU chose its response tariffs to the US steel and aluminium tariffs:

Meredith Crowley, international trade economist at the University of Cambridge, says that the EU is being far more politically savvy than just picking famous American goods. Instead it has chosen products made in states that are home to some key members of Trump's Republican Party.

"Bourbon is produced in Kentucky, home state of Mitch McConnell US Senate Majority Leader," she says.

"Harley-Davidsons are manufactured in Wisconsin, a swing state that is the home of the Speaker of the House Paul Ryan.

"The EU hopes these men will petition the president to save jobs in their home states by eliminating the US steel and aluminium tariffs."

Stephen Woolcock, a lecturer in economic relations at the London School of Economics, adds that the aim is "to have as much impact [as possible] on the policy debate in Washington".

That worked to some extent as the EU had hoped it would with Harley Davidson announcing they would shift more production outside of the US, which made Trump endorse a US consumer boycott of Harley, which probably amplified its domestic troubles. I guess Trump didn't care much about Paul Ryan.

For an older example of how the EU chose such tariffs:

While President Trump has undeniably been more bellicose about his willingness to introduce trade tariffs than past presidents, George W Bush also brought in tariffs on EU steel back in March 2002.

The EU quickly retaliated with levies on Florida oranges and juice, it what was an easy political target for two main reasons.

Firstly, Florida was (and remains) a key swing state, that President Bush had only won by just 537 votes in the 2000 US presidential election. With the 2004 election on the horizon, the EU guessed that Bush would not be happy about angry Floridian farmers.

Secondly, Bush's younger brother Jeb was governor of Florida at the time. "The EU was using tariffs to beat up the president's little brother," says Mr Collins.

According to reports at the time, President Bush agreed that the EU was being personal. He is said to have told the then European Commission President Romano Prodi: "Why are you attacking my family?"

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .