Forget about China, America's got a new foe on the trade front: the menacing Europeans! Yesterday, the WTO gave the European Union permission to tax up to $4 billion of American products annually.
Why? In a classic sea-saw, last year the World Trade Organization gave the US the permission to tariff European products in retaliation for generous EU subsidies to French-based plane manufacturer Airbus.
The European Union proceeded to counter-sue the US, arguing that the US Government also heavily subsidizes their domestic airplane manufacturer Boeing. So now the EU can charge their own tariffs on US goods in response to the US's original tariff – that's what we call a tariff tongue-twister.
What's next? The WTO's main motivation for the decision was to force both parties to come to the table to negotiate a settlement. But that could take years...
Zoom out: In the short term, key industries – already struggling due to COVID-19 – will be particularly hard hit by Europe's tariffs. Last year, the EU released a list of items it could tax, including aircraft, chemicals, citrus fruit, frozen fish and ketchup (not ketchup?!?).
This is really bad for news for Boeing. Between the grounding of their 737 MAX's fleet, the drop in air traffic due to COVID-19 and now European tariffs, Boeing can't catch any breaks.