Major Victory: US Importers Stockpile Cheese and Scotch
In an alleged "major victory" for Trump, the US Trade Representative announced U.S. Wins $7.5 Billion Award in Airbus Subsidies Case.
Bear in mind, Airbus is expected to win a larger WTO suit against Boeing next year.
It would seem that the best course of action would be for Boeing and Airbus to stop illegal subsidies, but that's not how Trump's mind works.
Trump Strikes Back
In retaliation for Airbus subsidies, Trump will strike back at the EU with tariffs on cheese and whisky makers.
This started a chain reaction in which U.S. Importers Stockpile Parmigiano and Provolone.
Ambriola Co Inc’s mammoth warehouse in West Caldwell, New Jersey, is crammed full of boxes and wheels of harder cheeses such as Parmigiano Reggiano, Pecorino Romano and Grana Padano - and more is coming, lots more.
Phil president and chief executive officer of Ambriola, a unit of Auricchio SpA, one of Italy’s largest cheese producers, is among the many importers and shop owners across the country who are scrambling to stockpile European cheeses before new U.S. tariffs kick in on Oct. 18 in efforts to shield consumers from price hikes.
The Trump administration on Wednesday slapped 25% tariffs on cheese and other European Union products ranging from whisky to woolens, in retaliation for EU subsidies on large aircraft. Both sides say they are open to negotiations, but trade experts see little chance of averting the duties - at least in the short run.
Some higher-priced items will simply disappear from stores, he predicted, like Moliterno al Tartufo, an aged Italian cheese with an intense truffle flavor. Even Parmigiano Reggiano could be at risk if prices rose to $30 a pound, he said.
President Trump, who has repeatedly claimed the EU has taken advantage of the U.S., is also poised to decide by Nov. 13 on whether to impose duties on imports of European cars and auto parts. “A nice victory!” Mr. Trump tweeted on Thursday, hailing the WTO award in the long-running aircraft fight.
Washington strategically crafted its list to hit exporters across the EU, and particularly in the four countries that make up the Airbus consortium—Britain, France, Germany and Spain.
Of the U.K. products targeted by the U.S., single-malt Scotch whisky makes up more than half of the total value—more than $460 million, according to the Scotch Whisky Association, a trade organization. “The U.S. is our largest and most valuable single market,” SWA Chief Executive Karen Betts said, citing some $1.25 billion in annual exports. “It will undoubtedly damage the Scotch whisky sector.”
Despite the EU’s current restraint, the threat of escalation persists. European officials warned the EU would hit back if U.S. duties are still in place when the bloc receives its WTO award in the Boeing case.
Case Started in 2004
The Boeing-Airbus dispute started in 2004.
Here are the Highlights of the 15-year Airbus, Boeing Trade War.
The US won the case against Airbus, but in March of 2019, the WTO said the "U.S. has again failed to halt subsidized tax breaks to Boeing in Washington state."
The EU's claim against Boeing is $20 billion. A final ruling isn't in, but most of the reports I have seen suggest something north of $11 billion.
Victory at Last
It is on this expected negative differential that Trump has proclaimed "victory".
The WSJ sums things up nicely Boeing-Airbus Is a Trade Dispute Without Winners.
Instead of going after airliners, Trump targeted cheese and scotch.
Airbus employs 3,000 highly skilled workers [in the US]. The most important site is in Mobile, Ala., which builds the best-selling A320 model and the state-of-the-art A220—which Airbus bought from Canadian manufacturer Bombardier in 2017. All of these jets need imported parts from Europe.
Bring on the Parmigiano!
Meanwhile, please note Trump Winning So Much It Almost Seems Unfair.
Mike "Mish" Shedlock