Some Good Tariff News

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I’ve written before about the 17-year-long dispute between the United States and the European Union over Boeing and Airbus subsidies. Each jurisdiction has placed tariffs against the other until they drop the subsidies, which, given political realities, will not happen. As a result, tariffs intended to spur reforms are not going to work, but were going to stay in place anyway, and with the World Trade Organization’s blessing.

There is good news to report. Those tariffs will now be suspended for four months, on both sides. In a phone call, President Biden and European Commission President Ursula von der Leyen agreed to the suspension to give them time to negotiate further.

The negotiations will likely be unproductive, but the tariffs should still not come back. They affect everything from French wine to American motorcycles—industries that have nothing to do with aerospace, and have done nothing wrong to deserve being hit with tariffs.

Both governments are wrong for subsidizing private businesses like Boeing and Airbus. But neither wants to fix it unless the other side does first. The scene is reminiscent of the Dr. Seuss story “The Zax,” in which two Zax, who only walk forward, both refuse take a step to the side and let the other one by when they come face to face, even though both would benefit. Until now, leaders on both sides of the Boeing-Airbus dispute have behaved almost exactly like Zax.

Most of the Biden administration’s actions so far have indicated that it will keep most of President Trump’s trade barriers, while adding a few of its own with green branding, but this is one area where the administration has taken a step in the right direction.

For more ideas on positive trade policy, see the trade chapter in CEI’s soon-to-be released Agenda for Congress, and CEI’s upcoming event celebrating its release, as well as Iain Murray’s and my paper “Traders of the Lost Ark.”