A French Defense Of Trump's New Tariffs On European Products
The U.S. president has a history of strong-arming trading partners. But the move to tax things like French wine and Spanish olives is actually justified.
PARIS — The United States announced a series of protective measures last month on a list of emblematic European products. The decision, made public on Oct. 3, includes a 10% tax on commercial flights, and a 25% tariff on things like English and Italian cheeses, Scottish and Irish whiskeys, French wines, German tools and Spanish olives.
It's tempting to see this as the Trump administration's latest attempt to wage a trade war it sees as both beneficial and easy to win. But in reality, the development is actually a return to normalcy in terms of international trade, and should be welcomed.
Trade disputes are a constant reality in relationships between sovereign states. And between Europe and the United States, there were plenty of problems — with the two sides accusing each other of dumping, trade agreement violations and discriminatory practices — before Donald Trump took office.
Trump is now trying to bend China to his will before tackling the European Union.
Commercial conflicts are par for the course, in other words, and they tend to be of two varieties.
The first are disputes that take place within an organized and structured legal framework, which can be multilateral, like the World Trade Organization (WTO), or regional. Such conflicts operate through the long and tortuous processes to which countries have agreed to settle their differences. They involve a complex, often imperfect set rules. But behind the process is a common goal: to foster cooperation between countries, and stop from them ratcheting up protectionist measures that end up hurting all parties involved.
The second category are disputes in which countries use every tool at their disposal to gain the upper hand. In these types of conflicts, it is common to circumvent or violate international agreements, and even to manipulate national legislation in order to "win" the battle.
The second strategy is only natural if one believes that international commerce is a zero-sum game where the winner is whoever manages to impose its conditions on others. And Trump, since coming into office, has shown that he clearly favors this second approach. In keeping with his campaign promises, he has used a number of American legal provisions — sometimes bending them to fit his goals — in an attempt to threaten and force his trading partners to acquiesce. Examples include section 301 of the U.S. Trade Act of 1974, and section 232 of the U.S. Trade Act of 1962.
Trump discussing tariffs in June — Photo: Andrew Harrer/CNP/ZUMA
After successfully coercing his partners into "renegotiating" treaties like NAFTA (involving the United States, Canada, and Mexico) and the Free Trade Agreement with South Korea, Trump is now trying to bend China to his will before tackling the European Union — and the German automotive industry in particular.
But the announcement his administration made on Oct. 3 regarding custom duties on European products was of a different kind. Indeed, it came just after the WTO ruled in favor of the United States in a 15-year-old case regarding illegal subsidies provided to the European airline producer Airbus. As part of the ruling, the trade organization authorized the U.S. to recuperate its losses — thus the new tariff regime.
By the same token, financing concerns regarding the U.S. plane manufacturer Boeing are being examined, with a ruling due next year, so the EU may soon have an opportunity to impose its own sanctions.
Either way, all of this is an example of the first type of dispute. And looking at the larger picture, it is exciting to see the return and legitimization of this kind of foreign policy tactic. The overarching message is clear: Even Trump's America can be in the right against Europe sometimes.
That being said, the multilateral system will not come out unscathed from Trump's administration. Cooperative-type institutions, such as the WTO, promote trade development by limiting trade barriers, but also (and perhaps more importantly), by removing the uncertainty of future arbitrary behaviors by member countries. And yet, if there's anyone who has shown the world that multilateral frameworks don't provide absolute assurance against erratic behavior, it's Trump himself.
*The author is a French economist and professor at Sciences Po in Paris.