The U.S. and European Union settled a costly trade war Tuesday, agreeing to abolish tariffs on purchases of new airplanes across the Atlantic.
The tariffs have restricted trade for the last seventeen years, between their respective domestic airline businesses and the world’s two largest plane manufacturers, Boeing and Airbus.
But don’t think that relaxing taxes on trans-Atlantic trade in the airline industry is a matter of taking the governments’ fingers off the scale.
It’s a direct challenge to Chinese airplane makers, and to US and European airlines that may otherwise have opportunities to cut costs and choose among more products by doing business with companies in China.
U.S. Trade Rep. Katherine Tai told reporters Tuesday:
“Instead of fighting with one of our closest allies, we are finally coming together against a common threat, [China].”
The scene in Brussels was like something right out of 1984, with a realignment of world powers, the latest in a never-ending cat-and-mouse dance that suits sovereign interests, but at the expense of the proletariat. George Orwell observed the same oddities in foreign relations in the 1940s.
Bottom Line: With rolling 12-month orders for new airplanes at abysmal lows, the trade deal will likely give Boeing and Airbus a shot in the arm, but for the express purpose of damaging opportunities for trade between trans-Atlantic airlines and Chinese airplane manufacturers.