President Donald Trump’s threat to bring new tariffs on $11 billion of imports from Europe has some Alabama officials concerned an ongoing trade war with the European Union could have adverse effects on Airbus America and the Port of Mobile.
Trump made the threat Tuesday morning in response to the World Trade Organization finding that European subsidies to Airbus have had an adverse impact on the United States and U.S.-based Boeing — Airbus’ primary competitor in the aerospace industry.
“The World Trade Organization finds that the European Union subsidies to Airbus has adversely impacted the United States, which will now put Tariffs on $11 Billion of EU products,!” Trump’s tweet read. “The EU has taken advantage of the U.S. on trade for many years. It will soon stop!”
The companies have accused each other of unfairly benefiting from government subsidies for years. The WTO has already found that subsidies to both companies violated international trade laws, but has not yet assessed the level of financial damage the two plane makers have caused one another and their governments.
Though it began in 2004, the conflict between Airbus and Boeing has come to a head during tense trade talks between the EU and the United States that began when the Trump Administration moved to place additional taxes on European steel and aluminum in 2018.
Washington and Brussels have proposed multi-billion tariffs on the others’ products, and that has been a cause of concern for Airbus, which depends upon parts and materials from the EU. In an email to Lagniappe, Airbus spokeswoman Kristi Tucker said Trump’s threat was “unjustified.”
“Airbus has taken all necessary measures to comply with the relatively minor elements highlighted by the WTO in May 2018 (which, even then, were less than six percent of all of Boeing’s subsidy claims) regarding alleged aid to Airbus,” Tucker wrote. “By contrast, Boeing has not shown any willingness to comply with the March 28, 2019, WTO decision regarding the massive subsidies received by Boeing that are clearly in contravention of WTO rules.”
If the Trump Administration moves forward with new tariffs on EU products, Tucker said that would “allow the EU to start proceeding with far larger countermeasures against the US” that would lead to even more “unnecessary trade tensions” between the two.
Sen. Doug Jones, D-Alabama, has been critical of Trump’s real and threatened tariffs on foreign products in the past because of the potential impact they can have on U.S. companies that depend on foreign imports and foreign companies like Airbus that employ Americans.
During a conference call with state media on Thursday, Jones said he was “very concerned” when he saw the president’s comments on Twitter. Even in cases where threaten tariffs don’t come to fruition, Jones said the uncertainty can negatively impact business. Jones also said, “trade negotiations shouldn’t be done through Twitter,” adding Trump “seems to not have a coherent strategy” when it comes to international trade talks.
“The Airbus facility in Mobile is huge economic driver down in South Alabama, and this is going to cause, I think, serious problems,” Jones said. “Everyone wants fair trade deals and wants to see America get a fair deal, but the way the president has gone about it is just wrong.”
Bill Sisson, president of the Mobile Area Chamber of Commerce, said the organization and its board of directors have “always stood in support of trade that is “free, open, but fair” but does not take a position on proposals during trade negotiations he described as always “evolving.”
“We’re always concerned about tariffs. That can, in some situations, affect the local economy, and any sort of trade war can certainly affect trade at our port as well,” he said. “We’re always very cognizant of these things, but we’re monitoring this at this point.”
Because of Trump’s connection both to the aviation industry and Boeing CEO Dennis Muilenburg, some criticized the timing of Trump’s announcement on Twitter — which came almost a year after the WTO finding he mentioned in his Tuesday morning Tweet.
Boeing has been under scrutiny from aviation authorities around the world as well as its own shareholders since March after two of its 737 Max planes crashed in just five months — a pair of accidents that caused 338 deaths aboard flights bound for Indonesia and Kenya, respectively.
Following the second accident, aviation authorities from more than 40 countries grounded the 737 MAX. The FAA initially declined to do the same but reversed course amid pressure from other countries and U.S. politicians on both sides of the aisle. Trump personally announced the decision, which came after new data connected the two 737 MAX crashes to one another.
On Friday, U.S. Rep. Bradley Byrne, R-Mobile, rejected the idea that the Trump administration would have been motivated to bring tariffs against Airbus because of any connection to Boeing and walked the line between supporting Airbus and Trump’s “tough line” on the EU.
“Obviously, Boeing has a major issue on its hands with this aircraft that’s not performed appropriately,” Byrne said. “They need to fix that, and they appear to be doing what they’re supposed to, but I don’t think that has anything to do with the substance of the negotiations between the United States and Europe.”
Echoing Trump, Byrne said Europeans had “taken advantage of us,” but he expressed confidence a trade agreement could be reached in the best interests of both countries.
As for Airbus, which is projected to employ more than 1,000 people in his district by 2021, Byrne said he shares the concerns about what impacts tariffs could have on the company.
“We’ve heard from Airbus about that, and we have communicated our concerns about that directly to the White House and the Department of Commerce,” Byrne said. “We’re engaged in discussion with both about that and I believe it will work out well for Airbus.”
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