Opinion

Trump Should Focus on US-UK Trade Agreement

President Donald Trump is focused on negotiating an improved trade deal with China so that American businesses and workers can compete. The administration appears to be making strong progress on this front — both sides have shown they are open to a deal amid recent de-escalation after the president announced a delay to new tariffs.

Given this delicate progress, now is not the time to open up new trade conflicts with foreign countries, especially with our closest allies.

Unfortunately, this is a possibility because of the conclusion of a 15-year dispute between the European Union and the United States over aerospace subsidies. According to media reports, the World Trade Organization will soon rule that Airbus received illegal subsidies from multiple E.U. nations in violation of free trade obligations.

Not only could this new trade front harm American businesses, farmers and consumers, it could deliver new complications to U.K. Prime Minister Boris Johnson’s Brexit push, a policy that Trump has consistently supported.

As part of its ruling, the WTO is expected to authorize over $10 billion worth of tariffs on E.U. exports. The E.U. has already stated that it could retaliate and has prepared its own list of products to impose tariffs on.

If both the U.S. and Europe misstep, this could harm American consumers and businesses. To be clear, Trump is right to stand up for American interests and pursue redress when foreign trading partners do not play by the rules. In this case, the U.S. plans to impose tariffs on commercial airplanes and aircraft parts coming from Europe.

However, others are also getting swept up in this dispute. Many of the products that may face a tariff are unrelated to the aerospace dispute — the products floated span a range of goods from across the Euro-zone, including seafood, dairy products, olive oil, fabrics and clothing, ceramics and liquor.

This could have significant economic damage. For instance, Scotch Whisky exports to the U.S. are valued at over $1.2 billion, so new tariffs would cost thousands of jobs lost and cause hundreds of millions in economic damage. 

Retaliatory tariffs will also hit U.S. alcohol manufacturers at a time when they are already hurting — American whisky exports to Europe have declined by 21 percent since June 2018. 

This is just one example of the potential damage. Exporters from every country involved will see an increased cost of doing business overseas. Costs will go up for any industry that relies on imported products for their business, resulting in higher prices for consumers and eventually lower wages and fewer jobs for American workers. There is significant exposure for the U.S. Forty-one million jobs — or 20 percent of all U.S. jobs — are directly tied to trade.

Rather than imposing trade barriers on the U.K., the administration should instead focus on negotiating a U.S.-U.K. trade agreement. Forgoing tariffs would have the added benefit of serving as a strong goodwill gesture to the British ahead of potential discussions.

While Trump is right to fight for better trade, America must strike a delicate balance. The E.U.-U.S. aerospace dispute should be resolved in a way that does not impose trade penalties on businesses that had no role in this dispute. Doing so would risk damaging global growth, U.S. exports and workers, and the U.K.’s Brexit efforts. 

 

Grover Norquist is President of Americans for Tax Reform, a nonprofit advocacy group dedicated to lower taxes and limited government.

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