There’s a famous line where if it moves, tax it. If it still doesn’t stop moving, adjust it. If it doesn’t move, subsidize it. While this may not be a reflection of how governments view the economy properly, it is precisely that subsidies and tariffs are sources of endless conflict in international trade relations.
While the world is focusing on the COVID-19 vaccine nationalism and the negative effects of trade barriers, there is a dispute over taxes and steel and aluminum quotas that are being ignored. While it may seem technical at first glance, Section 232 tariffs and import quotas have – and will continue to have – had a huge impact on EU-US trade relations.
Full Metal Jacket
Section 232 refers to part of the US Trade Expansion Act of 1962, which allows the president to use his powers of Congress to impose tariffs or quotas when determining that imports “are at risk. undermining national security ”. No longer a bureaucratic detail, this was put in place by President Trump in 2018 when he imposed a 25% tariff on steel and 10% on aluminum imported into the US.
The impact of this decision is also impressive as they have been widely disseminated. The imposition of tariffs raises the prices of important raw materials for US producers, leads to retaliation measures from the EU and other trading partners, and creates new tensions and tensions with allies and enemies.
As a result, other industries were seen as collateral damage in the steel and aluminum dispute, with a wide variety of goods ranging from agricultural products to spirits and luxury goods affected by tariffs. . Usually, the people most likely to suffer the most in any conflict are innocent people, but all parties need to work together to prevent this.
This is a sufficiently bitter medicine, but the EU’s retaliatory tariffs will double by June 1 this year.
Time to reset
With the coronavirus pandemic still holding a global grip and economies suffering the consequences, now is the time to consolidate the transatlantic trade relationship and re-establish it as the cornerstone of multilateral trading system. By spreading the steel and aluminum trade problem, the EU and the US can be a prime example of the rest of the world in difficult and uncertain times.
The tariff removal will create a huge impetus for many sectors in both the EU and the US. In the disputes between Airbus and Boeing, mostly unrelated sectors suffered the consequences, with Altantic’s significant export decline on both sides.
Some European firms in the affected sectors such as wine and spirits or confectionery lost up to 40% of their exports as a result. From the US point of view, the higher import price of steel and aluminum due to the imposition of tariffs heavily affected national enterprises. Some automakers report that the higher tariffs cost them more than $ 1 billion. At the same time, American steel and aluminum companies have seen falling stock prices, lower investment levels, and increasing layoffs.
Now is not the time to provoke. The EU and the US should reach a solution that will benefit everyone. While the current dispute may seem broad, complex, and insurmountable, suspending tariffs and quotas – as we saw in the Boeing-Airbus dispute – would be the best approach. .
Every job may look easy when you’re not the one doing it, but when it comes to lifting taxes and steel and aluminum quotas it’s in the benefit of everyone on both sides of the Atlantic. The clock is ticking.