Trump’s latest tariff hike directly hits the world’s biggest aeroplane company Airbus, and at the very same time, intends to help the struggling American planemaker Boeing.
In his newest move to spur American manufacturing, the POTUS is set to raise the tariffs the US levies on aircraft from Europe. Trump’s move directly hits the world’s biggest aeroplane company Airbus, and at the very same time, gives much-needed leverage to the closest rival the struggling American planemaker Boeing.
Heads Up! Trump Targets Airbus But That Won’t Solve Boeing’s Problems
- Why do the US and the EU have locked horns on Airbus and Boeing Government Subsidies?
- How Boeing’s problems are larger than hiking tariff for Airbus?
- Tariff harms American customers more than Airbus’ market
- All eyes on the expected United States – Europe trade deal in the summer
“Make America Great Again” is the tagline President Donald Trump has played and capitalized upon to arouse positive sentiment in his voters. His firm stand of America First plays a major role in the Trade War he has cooked up with tariff hikes and sanctions across the globe. However, if he wants to bring back glory days to Boeing, it isn’t Airbus that should be targeted because problems lie elsewhere.
The 15-year-old US-EU Dispute on Airbus and Boeing Subsidies
The increased tariffs directed by President Trump intend to amplify pressure from the United States on EU governments to stop giving subsidies to Airbus that are disadvantageous for Boeing. The move increases duty on Airbus and other EU made aircraft from 10 to 13 per cent. But while the US cries that the European subsidies bring an undue advantage to Airbus over Boeing, the US government does the same for latter.
In fact, the EU has been running a similar case with the WTO parallelly where it alleges that the US provides Boeing with unfair subsidies. The European Union is expected to levy a counter tariff on American Aircrafts, majorly Boeing, once it is greenlighted by the WTO.
The new Tariff may change focus for Airbus
As per Airbus’ Chief Exec Guillaume Faury, the company had been able to keep costs for US clients at a “manageable” level. However, the hike to 15 per cent makes the playing field much more difficult for the largest manufacturer of commercial aeroplanes. Consequently, it is expected that Airbus will look elsewhere to grow its business which is already seeing faster growth in South East Asia, India and China.
However, Faury is unconvinced about the tariff war and sees the much-anticipated trade deal between the EU and US later this year as much more significant. The Airbus Chief remarked that it was a “lose-lose situation”, urging world leaders to put disputes behind in 2020 and spur a golden era for the industry with “no tariffs and good competition.”
Chances of the US – EU Trade Deal
It isn’t just aircraft, but the United States and European Union have locked horns on several trade-related issues. France’s planned tax on US tech companies is another major flashpoint. While the US and EU negotiators have already met to hatch out a wider deal, they have failed to reach any consensus.
Boeing came short in its efforts to design a new plane to take on the Airbus A320neo and still lags behind the European manufacturer in terms of innovation.
Boeing has been struggling after the 737 Max debacle which culminated in a loss of trust among global aviation industry. The planemaker had to shut down manufacturing the version and lost billions of pipeline orders. While Boeing came short in its efforts to design a new plane to take on the Airbus A320neo, it still lags behind the European manufacturer in terms of innovation. And that’s precisely what’s hurting Boeing’s business.
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