In case the infernal war in trade was not enough to irritate, the World Trade Organization has just opened a new field. In a ruling issued Wednesday and reported to CNBC, the WTO mandated the US charge tariffs on Airbus aircraft in response to illegal government subsidies. It is expected to make a similar verdict soon about Europe's desire to abandon fares on Boeing planes.
The tariff announced on Wednesday will impose a 1
Yes, and both major aircraft manufacturers face tariffs due to government subsidies being exceeded by these megacorporations, it is difficult to know who will win. If the WTO fines imposed on both ends up being fairly weighted based on the cost of the subsidies received, then neither company benefits. And for governments, revenue from tariffs is likely to be lower than illegal subsidies in the first place.
The only group I can really get here is airlines that don't have headquarters in the US or Europe. If both Singapore Airlines and Delta Airlines both want to offer New York to Singapore with an Airbus A350 ULR, Delta can compete with an airline that can get a plane 10 percent less than any US carrier.
This generally emphasizes how ridiculous these disputes are. Make no mistake: it is not part of the trade war or the use of Trypillian economic revenge. This is the result of 15 years when both companies publicly complain about subsidizing the other.
United States. airlines – of course – are angry that about half of their planes are just 10 percent more expensive. According to CNBC:
"They will have to try to recoup the higher tariffs," said Savanti Sit, an analyst at Raymond James Airlines. "It's like a rise in price of fuel or labor."
Delta Air Lines, which has acquired European-made Airbus A350 aircraft to revamp its long-range wide-body fleet, as well as dozens of smaller Airbus short-haul aircraft, according to a spokeswoman, the decision "will seriously harm US airlines, millions of Americans which they use and the traveling population. " The Atlanta-based airline has about 170 Airbus aircraft on order.
JetBlue and Spirit have fleets. [mainly] Airbus narrow-body aircraft with dozens of new aircraft en route.
"We are concerned about the detrimental effect of aircraft fares on the ability of low-cost carriers, such as JetBlue, to grow and compete, which will harm the Clients who rely on us to offer competitive low fares," JetBlue said.
Both companies, it should be noted, are among the most subsidized in the world. And despite their massive political capital, it seems that no one is able to prevent his actions from reversing. I am sure Boeing is happy that the US is setting a fare for Airbus aircraft, but if it means that a company already in business is facing even greater problems with its European customers, it is difficult to be too excited.
But, as a rule, I am a free trader, I should also make a fair point that violent anti-competitive subsidization must be punished if we are to ever see a duopoly crack. When Airbus acquired the flagship Bombardier aircraft and Boeing entered into a joint venture with Embraer, no mature competition remained.
The only company that seems capable of breaking the duopoly is the Chinese Komak. But if you do not want to penalize Boeing and Airbus illegally, you will really try to get involved with a state-owned Chinese manufacturer.