The Trump administration plans to impose tariffs on $7.5 billion worth of European imports—from gouda cheese to single-malt whiskey to large aircraft—beginning Oct. 18 to retaliate against illegal European Union subsidies for aviation giant Airbus.
The latest escalation in the administration’s tariffs will open a new chapter in the trade wars that are depressing the world economy and heightening fears of a global recession. It comes just as the Trump administration is in the midst of trying to negotiate a resolution to its high-stakes trade war with China.
The administration received a green light for its latest import taxes Wednesday from the World Trade Organization, which ruled that the United States could impose the tariffs as retaliation for illegal aid that the 28-country EU gave to Airbus in its competition with its American rival Boeing.
The WTO announcement culminates a 15-year fight over EU subsidies for Airbus.
EU aircraft will face a 10% import tax; other products on the list will be hit with 25% tariffs. The administration insists it has the authority to increase the tariffs whenever it wants or to later the products in its list.
President Donald Trump called the WTO ruling a “big win for the United States” and asserted that it happened because WTO officials “want to make sure I’m happy.”
“The WTO has been much better to us since I’ve been president because they understand they can’t get away with what they’ve been getting away with for so many years, which is ripping off the United States,” Trump said at a joint White House news conference with President Sauli Niinisto of Finland.
Stock markets around the world, which were already down on concerns for the world economy, added to their losses on the news.
Wednesday’s award follows a WTO ruling in May 2018 that the EU had illegally helped Airbus with subsidies. It does not, however, end the long-running trans-Atlantic dispute over aircraft. WTO arbitrators are expected to rule next year about how much the EU can impose in tariffs following a separate decision that went against Boeing.
The EU’s top trade official had said the bloc would prefer to reach a settlement with the United States to avoid a tariff war but that it will respond if Trump imposes new duties on EU products.
Speaking after the WTO’s ruling Wednesday but before the Trump administration announced the new tariffs, EU Trade Commissioner Cecilia Malmstrom said a tariff war “would only inflict damage on businesses and citizens on both sides of the Atlantic, and harm global trade and the broader aviation industry at a sensitive time.”
“If the U.S. decides to impose WTO authorized countermeasures, it will be pushing the EU into a situation where we will have no other option than to do the same,” she said.
Italian Foreign Minister Luigi Di Maio, who was meeting with U.S. Secretary of State Mike Pompeo in Rome on Wednesday, vowed to “defend our businesses.” Italian wine and cheeses could be affected by U.S. tariffs.
Unlike Trump’s unilateral tariffs on billions of dollars worth of steel, aluminum and other goods from China, the EU and elsewhere, the retaliatory tariffs authorized in the Airbus case have the stamp of approval from the WTO, an organization he has repeatedly criticized.
German Chancellor Angela Merkel acknowledged “we have lost a matter under WTO law.”
“This means it’s not some sort of arbitrary question but a verdict according to international law that now weighs on Airbus, one must sadly say,” she told reporters in Berlin. “We have to see how the Americans will react now.”
The WTO in May 2018 found that EU aid for Airbus had resulted in lost sales for Boeing in the twin-aisle and very large-aircraft markets. The ruling centered on Airbus’ 350XWB—a rival of Boeing’s 787—and the double-decker A380, which tops the Boeing 747 as the world’s largest commercial passenger plane.
Airbus and Boeing dominate the market for large airliners, and Boeing’s deliveries have plummeted this year because of the grounding of its 737 Max jet after two deadly crashes. This limits options for airlines looking to expand their fleets to accommodate increased air travel.
U.S. airlines have argued against tariffs on planes and parts that they buy from Europe, and they have mobilized supporters in Congress. In a letter this week to Trade Representative Robert Lighthizer, 34 congressional Republicans and Democrats expressed opposition to tariffs on imported airplanes and parts. And they suggested that if the tariffs were imposed that they apply only to future orders.
The lawmakers noted that because aircraft orders usually stretch out years, it’s hard for airlines to change or cancel them. Tariffs on European planes “would simply make these aircraft more expensive ... and would do nothing to encourage the EU to end the illegal subsidies,” they wrote. By contrast, they said, imposing tariffs only on future orders from the EU would give airlines an incentive to buy U.S.-made planes.
The case itself dates to 2004, a testament to the plodding and thorough rhythm of the Geneva-based trade body.
Rod Hunter, a partner at the law firm Baker McKenzie and a former White House economic official, saw three possible outcomes: The EU can end the offending subsidies to Airbus, decide to absorb the tariffs or try to reach a negotiated settlement with the Trump administration.
In a statement, Lighthizer said, “We expect to enter into negotiations with the European Union aimed at resolving this issue in a way that will benefit American workers.”
The $7.5 billion represents a fraction of EU exports to the United States, which last year amounted to $688 billion.
But the specter of more tariffs comes at a sensitive time. Trump’s aggressive use of tariffs—especially against China—has shaken financial markets, hobbled global trade and hurt manufacturers paralyzed with uncertainty about where to buy supplies, situate factories and sell their products. On Tuesday, a private index of U.S. manufacturing output dropped to its lowest level since the recession year 2009.
“The market effect could be larger than just the impact on the European exports and their U.S. customers,’’ Hunter said.
Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics and a former U.S. trade official, cast doubt on prospects for a EU-U.S. trade deal that will ease tensions and ward off tit-for-tat tariffs, at least before the 2020 U.S. presidential election.
“Election years are bad for trade deals,’’ Hufbauer said.
The WTO is already examining a dozen cases involving U.S. tariffs and countermeasures brought by its trading partners over the administration’s steel and aluminum tariffs. Trump has insisted the move is needed to protect U.S. national security interests, but the Europeans claim it is simply protectionism and breaks global trade rules.
The EU has introduced “rebalancing” tariffs on about $3 billion of U.S. steel, agricultural and other products. Trump has also threatened to slap duties on European automakers.
Shirley C. Crisman
Kim J. Isherwood Sr.
Eva Kathleen Wells
During one of his family trips to Mexico that he loved so much, Christian D. Valdez saw bags of confetti sitting in a store.
Then it hit him—a confetti party. He wanted to have his family rain confetti on him as he came down the stairs of his Whitewater home.
So to celebrate his seventh birthday in April, Christian’s family made his wish reality—at a party 35 or 40 family members showered him in confetti “like there was no tomorrow,” said Christian’s cousin, Oscar Valadez-Valdez.
“I remember him coming down and just taking it all in because every one of us that was there was there for that moment,” Oscar said. “Ana, his mom, told us that he was really, really happy, that he told her that’s the happiest moment of his life.”
Christian’s seventh birthday was his last.
On Wednesday about five months after the confetti party, Christian’s family gathered again. This time, it was for a Mass of Christian burial at St. Patrick Catholic Church.
The service was a half-mile from where he was a second-grader at Lincoln Elementary School and just up Elizabeth Street from Whitewater’s middle and high school—schools he never got to attend.
Christian died after a Beloit teen hit him with an ATV on Saturday night during a birthday party in the town of Albion, according to the Dane County Sheriff’s Office. Christian was flown to UW Hospital in Madison for treatment.
Oscar was at home with his wife Saturday night when his mom called and said something happened to Christian, the boy who was full of energy and played with Oscar’s 6-year-old daughter during recess. They found a babysitter and drove to the hospital in the early morning hours Sunday.
He said Christian’s last heartbeat was at 10:18 a.m. Sunday.
That morning was a “blur” to Judy Valdez, Christian’s aunt.
Judy and Oscar answered questions about how they were doing by saying they were focused on taking care of Christian’s parents, Israel and Ana. Judy said they have given round-the-clock support to them since getting home from the hospital.
“We’re still here,” Judy said. “Again, we’re a close-knit family. So we haven’t left the parents alone.”
Christian loved being around his family, whether it was playing with his cousins or hugging and kissing his mom, Judy said.
He loved animals. Christian would play with Judy’s rescued yellow Labrador, who was bigger than Christian.
Christian also adored his pet cat, which she said he “carried around like a baby.”
“I just keep expecting him to run down the hallway, smiling, chasing the cat,” she said.
He enjoyed his toys, school and making hand-made crafts for his mom.
With a smile like his, he was always taking selfies. Judy said his mom’s phone is full of pictures of him.
“That smile was everything. If you see pictures of him, you’ll see his big smile is everything,” she said. “He was always smiling and always happy.”
And, of course, there was his love of superheroes. Oscar said Christian would wear his Batman costume from Halloween until January or February—“Every day if he could.”
“He was full of life,” Oscar said.
Mary Kilar, principal at Lincoln Elementary School, said Christian’s smile would make your day. She called him a “bright light.”
After hearing about his death, she said students shared what kind of friend he was. Some students cried. Some said they would miss playing with him during recess. Some missed his laugh.
“He was a model for us all, and he will be deeply missed by all of us,” she said in an email.
On the worrying drive to Madison early Sunday morning, Oscar said he and his wife were talking about appreciating every moment they have with their kids.
He said he has four daughters, and the youngest, Camila, is the 6-year-old who would join Christian at recess. In the days before the accident, she had been asking to go play with Christian.
But something kept coming up, and it didn’t work out.
“Now she doesn’t understand yet what that (his death) means,” Oscar said.
Christian had one sister and one brother.
This isn’t the first time Christian’s parents have lost a child. Oscar said their daughter was born with a twin sister, who died five minutes after birth.
The family planned to bury Christian next to her, Judy said.
As the church cleared Wednesday, one girl went to the front by herself to look at the flowers and pieces of art set up for Christian. One said “I will miss u this much,” and showed a stick figure spreading its arms as wide as the poster board could fit.
During the recessional, another young girl followed Christian’s family with his white casket as they exited the church—the same one where Christian was baptized.
She was holding a portrait of Christian—his smile beaming.
The odor emanating from the Birds Eye food processing plant in Darien has drawn complaints for years, but residents and a company official said Wednesday night that the smell has been less noticeable this year.
Birds Eye was due to re-apply for a Wisconsin pollutant discharge elimination system permit, which allows it to discharge wastewater from the plant at W8880 County X. At least five residents petitioned the state for a hearing to explain the conditions of the proposed permit and the odor. The state hosted the meeting.
Ian Hansen, a wastewater engineer with the Wisconsin Department of Natural Resources who drafted the permit, said it doesn’t regulate smell and instead focuses on wastewater regulation and practices.
Locals and the company’s site leader agreed the smell has improved.
“We’ve done a lot of things … to improve our odor. It has improved,” Kip Guyon of Birds Eye said.
Guyon has only been the site leader for a year, so he didn’t know what the smell was like before that, but plant growth and higher processing volume might have contributed to past odor problems.
He said the main source of the smell was organic material that built up in wastewater lagoons at the site.
Birds Eye keeps its wastewater in two lagoons, one that holds 35 million gallons and another that holds 25 million gallons. The wastewater is then pumped into four spray fields.
Both lagoons had leaks that had to be repaired and as a result, the aeration technology that helps filter smells was compromised for a short time, Guyon said.
Resident Mark Stiles said he has lived in Darien for nearly 40 years and that the smell was never as bad as it was in recent years. He wondered what changed this year to improve the situation.
“I’ve been living in Darien for, what, 37, 38 years? I know this wasn’t a problem in the past. Have you guys changed the products you’re using?” Stiles asked.
Stiles said he hopes this year’s improvement is here for good and that the change wasn’t merely because of the weather.
Shannon Henderson has also appreciated the fact that less of a smell was coming from the plant. She hopes it stays that way, too.
“The air has been so much better this year,” Henderson said. “We’ve only smelled it a few times this summer.”
Because of complaints and a worse stench in past years, the company increased how often it monitors wells and its planning for additional aeration, Guyon said. The west lagoons has been drained some to make permanent repairs.
In 2016, Birds Eye fixed aeration in the west lagoon before installing a dissolved air flotation system in 2017. It added aeration to the north lagoon in 2018, Guyon said.
Guyon said the changes have helped mitigate the odor in recent months. He said the number of complaints has steadily decreased from summer 2018 through this fall and that the company will continue to study how it can reduce odors.
“I can guarantee you that we’re doing our part,” Guyon said.