Life is full of disappointments and injustices, which is especially true for business life. The dairy industry may find it extremely unfair to be directly involved in the war of subsidies between the US aircraft manufacturer Boeing and its European counterpart Airbus. After all, what has the A320 got to do with cheese other than the fact that cheese (usually of inferior quality) is served on board these aircraft from time to time? Right, at first glance nothing at all. But the logic of a trade dispute is not at all about direct references.
The disputes between the USA and the EU about the amount of subsidies flowing into aircraft produc- tion on both sides have lasted for the past 15 years and are by no means attributable to the incumbent president. The way through the WTO instances simply took its time, and only now may the United States take action – which Trump can, of course, use joyfully in his “Make America great again” strategy. Usually, punitive tariffs are not imposed on the actually controversial area, because the opponent’s answer could really hurt in the end. This was evident last year, for example, when the USA introduced higher tariffs on steel and aluminium from the Europe and the EU, in return, made imports of whiskey and jeans more expensive. Italy is now particularly affected by the tariffs, possibly falling imports of products manufactured there are no problem for the USA, as the domestic industry can certainly come up with alternatives. It is not without reason, however, that French blue cheese was exempted from the sanctions, as the US cheese dairies are rather poorly positioned here. If, next year, the WTO grants the EU the right to take action against unpopular subsidies for Boeing, a sector of the economy other than US aircraft construction will certainly be penalised. Should it be US-dairy products (very unlikely), farmers there can rely on the dairy safety net, which was significantly improved last year.
But what is actually behind the whole game? The common view is that both sides always lose out in trade wars. Most of the time it has been so, but the situation has changed, at least as far as the US is concerned. The EU is no longer the largest or most important market for Americans. The former confrontation with Russia is history, the new strategic opponent is China. In addition, the United States no longer needs energy imports and therefore no longer has to make friends internationally or support certain geographical regions. The USA also no longer has to have so much manufactured in third countries, because the significantly increased automation was able to compensate for any shortage of labour in production.
The signs therefore remain open to dispute. Anyone who no longer has to take considerations into account can play entirely on his own advantage. Trump will be standing for reelection in 2020. He will definitely continue with his “Make America great again” program. In this respect, the punitive tariffs on European dairy products will remain in force for quite some time, fears Roland Sossna.