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Airbus hit as new US tariffs come into force
- ppeetteerr 6y agoIf this is similar to the old tariffs, it affects only new aircraft. Some airlines were already buying Airbus planes from Europe and flying them in South America long enough for the planes to be considered "old" so that they may be excluded from the tariffs.
- belval 6y agoYou have to admire the out-of-the-box and absurdity of that solution. Someone actually sat in an office and realized he could save money by letting aircrafts decay in South America before using them.
- ppeetteerr 6y agoRight?! There is probably some import team at United who is tasked with minimizing buying cost and a budget in the millions.
- MattGaiser 6y agoLaws create absurd situations. In Canada, it was cheaper for pizza companies to buy cheese with pepperoni from the US than buy cheese here. https://www.betterfarming.com/online-news/feds-close-pizza-cheese-import-loophole-54153 https://www.betterfarming.com/online-news/feds-close-pizza-c...
- ppeetteerr 6y agoI hope we can one day talk about cheese on HN. That entire industry survives on tariffs and government handouts.
- MattGaiser 6y agoI think it does in every country.
- Glawen 6y agotarifs don't matter in France. Why would i buy a foreign cheese if I don't like it, even if it is cheaper? e.g. I rarely buy gouda because I find it less tasty than a comté or tome, but it is foreign and cheaper!
- belval 6y ago"The cheese in the kits should be classified as a dairy product and be subject to the 245.5 per cent tariff for cheese products that are subject to duties" I knew we were subsidizing the dairy industry in Canada but this is an insanely high tariff.
- munificent 6y agoIn the US, imported Ford Transit vans go through customs, and then the rear seats, seat belts, and windows are torn out. All to avoid a tarriff instituted by Johnson in the 60s to retaliate against Europe for instilling tarriffs to avoid the US dumping cheap chickens on them. https://www.washingtonpost.com/business/economy/the-strange-case-of-fords-attempt-to-avoid-thechicken-tax/2018/07/06/643624fa-796a-11e8-8df3-007495a78738_story.html https://www.washingtonpost.com/business/economy/the-strange-...
- TorKlingberg 6y agoI'd think this kind of thing gets discovered organically. Airlines constantly buy and sell planes. South American airlines will notice that they can sell couple-year-old aircraft to the US for good money and upgrade to brand new Airbuses at hardly any cost to them.
- whalesalad 6y agoIs this an attempt to prop up Boeing from collapse? Really lame solution if so.
- ppeetteerr 6y agoI don't disagree. One thing that came to mind the other day, as I remembered how a family member of mine lost their job at a national airplane company. Their job prospects were very slim and required moving across the country. The industry is very specialized. I dislike tariffs as much as the next globalist but I do feel for family. Conflicted, you might say.
- NullPrefix 6y agoThis sounds like welfare with extra steps
- ppeetteerr 6y agoAgreed. Unlike other countries, the USA are allergic to the word "welfare", so they have to go through all these convoluted steps to do the same thing
- throwaway0a5e 6y agoThe more extra steps the more ethically murky it gets. Is creating a regulatory environment where public infrastructure construction and maintenance prices soar to astronomical levels because you have three people getting paid hourly to supervise one guy who's running a pavement miller "welfare" or is it crony capitalism for the construction industry? I'm fine with welfare, but thinly veiled handouts to politically connected groups seems a hell of a lot less efficient way to better society than just directly funding or tax-incentivizing homeless shelters and food pantries. Also some of the shadier cases of "well if you put a positive spin on it then this is just welfare" behavior are too graft-like for my tastes.
- ChuckNorris89 6y agoWell yes, but this way you're only giving welfare to some highly skilled people (plus useless execs) who also happen to be useful in wartime. Not the kind of people you want to loose long term. The EU also subsidizes Airbus, agriculture and other critical industries.
- BFatts 6y agoTariffs don't hurt the producer as much as the consumer. But stupid politicians will tell you otherwise because they think they are smart!
- asciident 6y agoCan you explain this a bit more? If there's a tariff on a component, wouldn't the buyer look for cheaper domestic replacements? So maybe a mix of both -- they pay more in the short term, but it gives domestic suppliers a better chance to win the business over the long term?
- Jonnax 6y agoIt depends on whether there's a local alternative and whether it's desirable. The key thing is whether the product is fungible. A Boeing part isn't going to be useful to repair an Airbus owned by a US carrier.
- ericd 6y agoHow do you maintain wage and standard of living differentials with the rest of the world when transportation is as cheap as it currently is without a productivity gap, tariffs, or a carbon tax (increasing transportation cost) to make local manufacturing more attractive? Besides, there are big strategic reasons to maintain a strong domestic aerospace industry, even if it increases costs in the short run.
- missedthecue 6y agoLike Adam Smith pointed out, the ideal set-up is to maximize imports and minimize exports. This will make your nation richer over the long run.
- ericd 6y agoIf you do that, don’t you have to essentially export money? Which can then be used by your counterparties to buy up your nation’s productive assets, and diminish the effective savings of your populace via asset inflation? Also, aggregate wealth of a nation isn’t the only thing we should be targeting. You can increase the overall wealth while simultaneously demolishing the wealth of the large portion of your populace involved in domestic manufacturing.
- cmehdy 6y ago"Among the goods to see an impact from the widened net of additional duty are European made wines, which will attract a 25% duty, and French and German-made aircraft parts, attracting a 15% tax." As a French person, I can't help but feel like there's some sort of personal attack happening there. Wine and airplanes? Hey, I think you guys forgot to tax cheese and sarcasm while you're at it! Let's hope that a new US administration will figure out healthier ways to trade with the EU, but I'm not holding my breath since these petty fights have been going on for more than a decade and more than a US president anyway. edit: Funnily enough, there are some pretty bitter replies to my message. I'll remind all the preemptively angry commentators that I called the whole process "these petty fights" because it's not unilateral (not just the US taxing stuff but the EU too, as is literally pointed out in the article).
- jdsully 6y agoThey are upset at France taxing tech companies. The targeted attack is very much intentional and intended to be a tit for tat.
- godzillabrennus 6y agoTrade wars are fun like that. Hopefully cooler heads prevail after the wine industry in France gets their politicians to back down.
- gridder 6y agoExcept tech companies pay almost 0 taxes in Eu, while wines etc. were already @ 14%, raised @ 25 %. Also tech companies have no competition in the EU, while wines and planes have competition in the US.
- molszanski 6y agoInvisible hand fo the market is steering the wheel, nothing we can do
- Grimm1 6y agoThis is the exact opposite of that...
- patrickk 6y agoIt was sarcasm...
- molszanski 6y agoIt was sarcasm of course
- deleted 6y ago[deleted]
- WhoCaresLies 6y agoMr Slaves and Ms Slavettes, that is how "murica" has global giants, they send their lawyers when they have competition
- piewzko 6y agoHopefully US and EU relations will improve in the coming years. Performing these type of actions between such close allies is just mind boggling.
- anewaccount2021 6y agoI don't think this really signifies a meaningful deterioration - this has been happening forever. Its diplomacy by trade policy. The EU does the same to us, we do the same to Canada, Canada does the same to us. Usually the penalized industries are just propped up with subsidies in the targeted country anyway. If anything, trade wars were more vicious a century ago than they are now. In most of these nations, the measures have strong support. You can't expect a Canadian farmer or French wine maker to put the concerns of Americans above their own economic interests. I highly doubt homegrown EU-tech companies were at all bothered by recent measures against US tech giants.
- fogihujy 6y agoThere are concerns, especially in regards to the legality of Office 365.
- VBprogrammer 6y agoI wonder how taxing aircraft parts works. If United reacted to this by flying all of their Airbus aircraft to the EU for any major overhaul would they be taxed on the way back?
- tonyedgecombe 6y agoOr just to Mexico/Canada.
- otoburb 6y agoCertain European wines under 14% ABV, whiskies, cheeses and other agriculture products have been levied a 25% import tax by the USTR since October 18, 2019.[1][2] [1] https://time.com/5704663/trump-tariffs-whiskey-wine-cheese-eu/ https://time.com/5704663/trump-tariffs-whiskey-wine-cheese-e... [2] https://www.decanter.com/wine-news/us-eu-wine-tariffs-100-percent-432054/ https://www.decanter.com/wine-news/us-eu-wine-tariffs-100-pe...
- iso8859-1 6y agoDid American cider stocks go up because of this?
- andy_ppp 6y agoWon’t this just mean Airbus planes are serviced in Canada and Mexico instead, costing American jobs? I mean with Boeing having issues are Airbus really going to lose business over this type of short term stupidity (from both sides).
- danielovichdk 6y agoLooking at the list https://en.m.wikipedia.org/wiki/List_of_exports_of_the_United_States https://en.m.wikipedia.org/wiki/List_of_exports_of_the_Unite... there is nothing the US had that Europe can't get somewhere else. And no Wonder USA imposes tax on Europe since the country is absolutely economically fucked.
- tannedNerd 6y agoPerhaps reading the article instead of just pulling stuff out of nowhere would be helpful to making a salient point. This has nothing to do with economics, which the USA is still doing better on a measure of GDP than then EU, hell even California alone does better than everyone but Germany. It’s a tit for tat retaliation since the only tech companies France wants to tax so heavily are American.
- wonder_er 6y ago"You're hurting your people with dumb tarriffs, making American-made anything more expensive to your population??? Oh yeah? Well, WE'RE GOING TO HURT OUR PEOPLE WITH THE SAME ILL-CONCEIVED PLANS!" Meanwhile, the people: "Ouch. Please stop. If you can't stop the other government from hurting their own people, can you at least stop hurting us, government?"
- LockAndLol 6y agoNext election: let's vote for the same people who hurt us. They said they wouldn't this time.
- frr149 6y agoGreat news for China: a EU/US trade war.
- syntaxing 6y agoLet's just say hypothetically the French government was propping some serious money into Airbus and wine industry that makes the United States not able to compete at all. What is the most effective way for the US to respond? Prohibit imports? Slap tariffs like now? Buy a serious amount of Euros? Pump even more money into the US industry? Or some sort of other alternative?
- 8note 6y agoTake the free stuff?
- MayeulC 6y agoThat would create unfair competition for local production, though. Starbucks, Amazon & other big chains/companies have used that strategy in the past: sell at a loss locally, turning a profit elsewhere, until there are no competitors left. Then ramp the prices back up (and above).
- chki 6y agoConflict resolution mechanisms in the WTO are a very sensible solution to trade disputes, if parties actually adhere to the rulings and do not sabotage the decision making bodies.
- esyir 6y agoClause 2 and 3 of your statement here seem to be taken for granted.
- maxcan 6y agoLovely. Because aviation, especially general aviation, isn't expensive enough already.
- albertgoeswoof 6y agoActually it’s remarkably cheap considering the environmental impacts.
- alkonaut 6y agoHow are goods valued when it’s transferred across borders within the same organization? Parts from France to be assembled in Alabama aren’t necessarily “sold” so don’t need a value. How are tariffs calculated then?
- rad_gruchalski 6y agoAirbus Americas, Inc. headquarters is located in Herndon, Virginia. The parts are 100% sold.
- dingaling 6y agoAirbus America should switch to paying a substantial 'licensing fee' to Airbus SaS, in return for which they can use the trademark and also receive compatible parts for $1 each...
- rad_gruchalski 6y agoThose would be most likely different SKUs. The parts have to be still imported and money would have to change hands. If I raise you an invoice and you raise me an invoice, we can’t pay them by simply offsetting them.
- alkonaut 6y agoIs that the case for all assembly taking place abroad? i.e. is that a requirement for being able to do the export/import, that the importer is a US company? Even so, what forces them to charge for it at all? If Airbus says a plane hull is $10 who challenges that?
- rad_gruchalski 6y agoIf the hull costs the US company $10 but $1m to manufacture, who covers the loss? There is a loss of profit so airbus needs governmental bail out. The US has now two reasons to be further upset. Or do I see it wrong?
- volta87 6y ago> The tariff will have a significant effect on production of the Airbus A320 in Mobile, Alabama, something which Airbus has claimed will only hurt US workers. How will this hurt US workers? Sounds like this is suggesting that either they will pay the workers less to compensate, or maybe even move the factory elsewhere to avoid the tariffs (moving the factory to mexico might mean the tariffs disappear until new tariffs against shipping planes from mexico get approved, which might take some time).
- harg 6y agoThat’s assuming that all the planes manufactured in Alabama are not exported outside the USA. E.g. to airlines registered in Mexico, Canada, S America. I imagine that at least some are exported so moving manufacturing outside the USA would definitely hurt employment.
- volta87 6y agoIIUC the goal of the Alabama factory is to work around the existing tarifs on shipping planes to the US. Instead of shipping the planes, Airbus ships the parts, and assembles them in the US, thus avoiding the plane tarifs. So now there are tariffs on "plane parts". Maybe they'll just stop doing this, close the factory, and ship whole planes from the EU again. Depends what the difference is in the plane and plane parts tariff, and whats more worth it.
- Grollicus 6y agoWikipedia has a summary of the history of this shitshow: https://en.wikipedia.org/wiki/Competition_between_Airbus_and_Boeing#Controversies https://en.wikipedia.org/wiki/Competition_between_Airbus_and...
- stunt 6y agoThe irony is that Airbus has also lost a lot of money because of the US sanctions against Iran which wasn't even supported by the EU.
- bluecalm 6y agoIf the whole Covid situation taught us something it's that we need to be more independent of other countries and encourage local production of many goods. Tariffs sound like an easy way to do just that. Tax imports, help local producers. I don't see the problem tbh. All those free trade models ignore the scenario of everyone getting dependent on one exporter and then that exporter either going rouge or having problems and not being able to meet the demand anymore. I am very surprised by tariffs = war sentiment. It's just a way to have some protectionism. It works and is needed. Where is the problem?
- mywittyname 6y ago> It works and is needed. Where is the problem? The problem is, tariffs don't really work. Not in the long-term. Tariffs can hurt local producers too. If a company is just so efficient at producing good that they can produce cheaper products inclusive of the tariff, then the local company has no chance. They have no hope of expanding outside of their local markets and they will eventually give up. Most of the time, tariffs merely act as extra profit margin at the expense of the local economy. So the local company has no incentive to improve. So, in the long-term, tariffs on imported goods are are effect way of destroying local industry. It often drives the competition to fiercely optimize their production, making them substantially more competitive on a global market. The only time tariffs are effective at protecting a market, is when that market only exists locally, not globally. Thus, preventing any producers from gaining efficiency on the global market before tackling a domestic one. If you want the government to prop up a local industry, get the government to purchase a large volume of goods from them at a fair, but highly-competitive price. Then the producer has incentive to optimize production because they know exactly how much they can save each year. Decades of small incremental improvements add up.
- bluecalm 6y agoYour argument again misses the issue of security. Yes, tariffs hurt efficiency on a global scale and they hurt consumers in your country (as they now will have to spend more to get the same goods they could have get cheaper). Creating or keeping less efficient industry gains in scenarios where foreign actor you depend on for imports stops meeting demands (either on purpose to hurt you or if disaster like a pandemic hits). It's a trade-off between efficiency in a perfect world and security in a real one.
- mkl95 6y agoIt seems kind of strange to see such big changes a week away from the next term. Is there anything preventing Biden (whoever is in charge of this) from reverting this tariff on January 20?
- blacksmith_tb 6y agoIsn't it a 15% tax on aircraft parts (the 25% tax is on wine)? The first sentence of the article is "The United States is, from today, levying a 15% duty on imported aircraft parts coming from France and Germany."
- dang 6y agoThe submitted title was "US imposes 25% Tarriff on importing aircraft parts from Europe". Submitters: please observe the site guidelines, which include: "Please use the original title, unless it is misleading or linkbait; don't editorialize." One reason we have that rule is to avoid errors like this one. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- fuoqi 6y agoLooks like this and the recent actions are simply a big middle finger aimed at the new administration. Try to revert them and you will be labeled as a weak leader who values foreign interests more than domestic ones (i.e. you will anger and radicalize the MAGA crowd even further), leave them in place and your relationships with affected foreign countries will continue to be sour.
- yutuibe 6y agoMeanwhile the eu is undercutting its own industries by making free trade agreements with china. Hey germany needs to sell their obsolete car tech somewhere. Edit: of course there is a downvote. The incels must be quite annoyed at facts. EU industries will pretty much succumb.
- thewarrior 6y agoWhat does the United States do when facing the challenge of dealing with a rising China ? Alienate the EU by placing tariffs on them driving them right into the arms of China. Looking at recent events it really does seem like the US is losing its way.
- trynumber9 6y agoIt's a long series of tit-for-tat tariffs and subsidies. Not particularly novel and has persisted between multiple administrations. Honestly, I'm surprised it took this long following the WTO ruling: https://www.cnbc.com/2019/10/02/wto-rules-in-favor-of-us-in-aircraft-subsidies-dispute.html https://www.cnbc.com/2019/10/02/wto-rules-in-favor-of-us-in-...
- thewarrior 6y agoSure but the context has changed.
- trynumber9 6y agoYes. It was still pretty much just a Boeing vs. Airbus dispute arbitrated by the WTO until the EU did this: https://www.capitalpress.com/nation_world/agriculture/eu-imposes-4-billion-in-tariffs-on-u-s-goods-including-farm-products/article_0fd6b57c-22d8-11eb-93d0-f7373eea991b.html https://www.capitalpress.com/nation_world/agriculture/eu-imp... in response to the US trying to implement the aforementioned WTO ruling.
- LockAndLol 6y agoIf that's the price of reigning in US tech giants, so be it. Make planes and flight more expensive, in fact, please tax flights heavily and introduce a yearly limit. Then, use that money to expand the train network and promote it for long distance travel. Maybe something good will actually come out of this instead of dumb posturing.