If President Donald Trump imposes new tariffs on European goods next month, America’s transatlantic allies can’t say they they’ve been blindsided like they have with other trade policies launched from his White House.
While some may bristle that the self-proclaimed “Tariff Man” is expanding his trade fight with the European Union, Trump would be acting on the right side of international law in a long-running case pitting Toulouse, France-based Airbus and Chicago-based Boeing. This time he’ll have the explicit authorization of the World Trade Organization, the referee of global commerce.
Here’s how the international trading system is supposed to work:
- If a country gets upset with another country’s trade practices, it can file a dispute at the WTO where a panel of experts offers a judgment. If the losing country doesn’t comply with that ruling, the WTO allows the winning country to retaliate.
- For most of his first term in office Trump has preferred to cut to the chase and levy tariffs that he says are exempt from WTO oversight because they’re necessary to protect America’s “public morals” and national security.
- But in the instance of Airbus, Trump and his predecessors have pursued and succeeded in a landmark case against the EU that’s been a decade-and-a-half in the making.
- Last year the WTO ruled that the EU hasn’t ended its illegal subsidies, which Boeing and the U.S. claim give Airbus an unfair advantage, and the WTO will soon green-light new U.S. tariffs on billions of dollars worth of European goods.
But the other shoe has yet to drop. In a similar action that’s still winding through the Geneva-based WTO, the European Commission is readying its own tariffs on U.S. exports in retaliation for unfair subsidies given to Boeing. EU Trade Commissioner Cecilia Malmstrom summed up the situation on Monday by saying “both we and the U.S. have sinned” and the time has come to settle the dispute rather than resort to tit-for-tat tariffs.
The multi-billion dollar question now: Will Trump see an opportunity to forge a comprehensive aerospace accord with the EU or kick off a transatlantic trade war of epic proportions instead?