Fairness would be no tariffs at all and no taxes that effectively act as tariffs because there’s no comparable domestic competition. Life isn’t fair though.
One reasonable thing to impose tariffs on is products made with slave labor, or labor paid at less than the minimum wage in your own country. The benefits are twofold, disincentivizing slave labor in other countries, and incentivizing local supply.
Surely products made with slave labour should be banned outright?
There are good reasons to impose tariffs otherwise. Slavery is a good reason, and the counterparty-country being a communist dictatorship is another good reason. You want to start a list?
If effective, there can be a second order effect that pressures other countries to raise their standards as well.
The fairest trade is where two people walk away after an exchange with both people feeling like they made out well in that exchange. Tariffs are a form of state interference in these exchanges because to import my fancy cheese, I have to pay more than the fair market value and shipping costs, I have to pay for a tariff as well. I just want my fancy cheese to go with my domestic wine, I don’t want to pay more than I have to for it.
Now if the tariffs on both sides of the metaphorical pond sum out to zero so that imports on both sides paid about the same in tariffs, that’s fair, but that’s rare. Tariffs aren’t about fairness though.
Now if you want to impose tariffs to be fair to the businesses operating in your regulatory environment, well that’s fair, but that’s a different type of fairness obliging a different set of entities.
To be clear, I’m not anti-tariff. My priorities might be different, and all other things being equal I prefer no tariffs to tariffs by default, but let’s not pretend they’re intended to make trade fairer. They’re revenue first, retribution second (these last two may have flipped in the 20th century, but that’s a separate argument to have), and all other effects are tertiary.
Tariffs raise revenue and serve political ends, which can be protectionist in nature or serve some other purpose. That’s fine, as long as we recognize that we’re using them for political ends. The fairest trade of them all is going to be between two people that can make an exchange without state interference and without feeling like the other person got more than they did, and tariffs interfere with that type of exchange.
Why does your definition of fairness include a clause about state interference? I don't think you can argue in good faith about whether or not governments can act to increase fairness if your definition of fairness excludes government action.
Trade will occur at any price between the value to the consumer and the cost to the producer. In a perfectly competitive market, the agreed upon price approaches the cost to the producer, and it will necessarily be the case that the consumer got more from it. Is that fair?
This is going to sound condescending, and I'm sorry about that, but you should consider adopting a principled set of economic beliefs rather than one based exclusively on your politics.
> This is going to sound condescending, and I'm sorry about that, but you should consider adopting a principled set of economic beliefs rather than one based exclusively on your politics.
I appreciate the consideration and that is good advice. If I had more time I would go back and re-read what I said to see if there’s anywhere my politics and economics appear to be blending together because I do actually try to keep those separate.
Primarily what I’m arguing here, or intending to be arguing are terms from a mostly neutral perspective, it’s still my perspective, so not entirely neutral.
With all due respect I enjoy reading discussions where people are agreed upon on what they are discussing, and tariffs are one of those discussions where words like “fair” get thrown around in several different directions, and inherently they are not fair and not intended to be fair. They serve a purpose, a revenue generating political purpose, maybe even several political purposes, and when words like “fair” get thrown around in such a manner, it really ruins the discussion because it’s not a discussion: it’s a tactical game of obfuscation played by whoever influenced the participants views most strongly.
So let me quote myself from a different comment chain. Perhaps you will still perceive my economics and politics to continue bleeding together; I think any considerations of economic policy are going to have some level of politics in then considering what is being discussed is a form of policy, but I haven’t put forward any explicit policies today.
> To be clear, I’m not anti-tariff. My priorities might be different, and all other things being equal I prefer no tariffs to tariffs by default, but let’s not pretend they’re intended to make trade fairer. They’re revenue first, retribution second (these last two may have flipped in the 20th century, but that’s a separate argument to have), and all other effects are tertiary.
How does the counter-party nation feel about the tariffs imposed on their exports?
You’re right to bring in why existing tariffs exist, there’s always a reason, but when fairness is the cited reason, what you are really talking about is a retaliatory tariff. “Fairness” is the rhetorical justification when people ask why the fancy cheese is more expensive than it used to be; “our cheese is worse” and “it costs them less to make it” are just harder sells.
One could argue that despite all the headline drama, evening US-EU goods tariffs and making US tech companies pay taxes in Europe lands on a more equitable arrangement, rather than de facto subsidizing EU agriculture and US tech.
[0]It's hard to find intuitively meaningful numbers for this stuff since it's so complicated, but you can see that the EU "general goods" tariff has a mean average of 5.1% vs 3.4% for the USA here: https://www.wto.org/english/res_e/booksp_e/tariff_profiles20...
[0]: https://www.reuters.com/article/us-trade-wto-eu-russia-idUSK... [1]: https://www.wto.org/english/news_e/news20_e/good_11jun20_e.h...
> They come as the tit-for-tat battle over aircraft subsidies continues to escalate. Both Boeing and Airbus are accused of taking government subsidies to support their businesses, and both Washington and Brussels have won cases at the World Trade Organization to levy tariffs in response.
Occam's razor says we should go with the hypothesis that something that fits in perfectly with the ongoing actions both sides have been taking in a long running active dispute is probably part of that dispute.
Hopefully cooler heads prevail after the wine industry in France gets their politicians to back down.
Unless it comes from the proper region of the Ohio River Valley, I'm afraid it's just dry sparkling wit.
However, the word comes from the Greek σαρκασμός (sarkasmós) which is taken from σαρκάζειν (sarkázein) meaning "to tear flesh, bite the lip in rage, sneer"[0]
Greece being in the EU, I think the EU has a pretty good claim to it!
Alternatively, the English version of the word is definitely coming from the UK. Admittedly, most of the dry wit in the world comes from the perfidious Albion, so they too might have a claim when it comes to common usage (and perfecting the art of it). I'm afraid the Ohio River Valley will be stuck with calling it XXL sparkling wit.
I fear you are correct in that the UK has a strong claim on all counts here. That said, I think the Ohio River Valley has a distinctive form of sarcasm to the bone-dry wit of Albion.
[1] https://nos.nl/artikel/2362596-vs-komt-met-heffingen-op-fran...
Didn't the EU do the same thing with their retaliatory tariffs a few years ago? They were taxing some uniquely "american" goods, eg. harley davidson motorcycles.
Is targeted tariffs something the G8/WTC doesn't like/promote?
It was chosen because many know the brand, escalating a trade war would be stupid for both sides.
Harley Davidson was one of these companies. They weren't doing well before they got caught in the middle of this trade war, since the "biker" culture it aimed at was shrinking globally, so in a move to survive they decided to move production to South America. Turns out their audience didn't like this move, and its death accelerated.
TL;DR: Trump put a tax on European steel, and the EU snipped Harley Davidson in retaliation.
Their stock price (even over five years) doesn't appear to reflect this.
Their stock price today is around 30$. In the early 2000s it was around 90$.
Also, like the other comment mentioned, HD has been playing a lot of financial tricks over the last 20 years to prevent the stock price from declining (e.g. buy backs to artificially inflate stock price, take a look at the number of outstanding shares: https://www.macrotrends.net/stocks/charts/HOG/harley-davidso... , a reduction from 280 million to 150 million in the 2005-2019 time period).
EDIT: I recommend https://www.youtube.com/watch?v=EOwxxsPaogY for a summary.
HD decision of focusing their brand on a "hardcore biker" culture that has failed (and arguably even alienated) younger customers is what killed the company.
All customers age, but what HD has failed to do is attract new customers at a faster rate than the death rate of their current customers.
They sell a little under a million units a year there.
https://www.statista.com/statistics/642946/eu-ford-car-sales...
Ford is pretty heavily involved in Europe. Cars are bigger in Europe, so Ford cars tend to be developed there, while trucks and SUVs are bigger in America, so design of these vehicles is largely done in America.
https://www.best-selling-cars.com/europe/2019-full-year-euro...
This is a function of our China policy and insistence on maintaining the dollar as the world’s reserve currency.
I'm nowhere near a 1%er and I strongly prefer the taste of old world wines. Count me among the annoyed.
For the majority of the population, maybe. But for people that actually care about wine, this couldn't be farther from the truth. It's kind of like saying that domestic American whiskeys are roughly equivalent to Scotch.
It's bad for the consumer, but that applies to anything that isn't fully free trade.
edit: not condoning either take...
(this is meta comment, don't be offended)
Wine is probably less directly pointless to charge a tariff on, but if the tariff is on the import price, it won't particularly be a big piece of the retail price, and it will be paid by the person buying the wine.
We are taxing ourselves to own the French!
Driving a wedge between us, eu is laser focused by many non eu, us companies due to the amount of possible market share gain. China is coming out with their own air transport company as well as a few other industries.
So really it is US, EU vs the world in some of these interests.
"In 2004, the US argued that the French, Spanish, British and German governments had handed out loans to Airbus at interest rates well below market standards. The WTO ruled in favor of the US and decided that, as compensation for the damage caused to the US aviation industry, Washington could impose as much as $7.5 billion (€6.34 billion) worth of European exports. The decision principally affected products from Germany, the United Kingdom, France and Spain."
https://english.elpais.com/economy_and_business/2020-08-13/u...
Lest we forget that EU also has high tariffs on US cars, and other exports.
And is it possible the EU settled this trade dispute, because it established precedence for ruling on these kinds of trade disputes..
I'm not expert on this, but recalling here this tale told in a different light.
In either case, as a European I'm not sure I mind tarriffs as a response to unfair subsidies when the subsidy practice has been ruled unfair by WTO.
That door swings both ways. And if we've been unfairly subsidizing airbus I guess this is fine.
I heard they have good wine and apples, too ;->
Liberté, Égalité, Puérilité!
/me just shrugs and thinks more and more of Idiocracy, Planet of the Apes, and so on.
We're all hopeful that things will get better when we have an actual adult in charge of America. Sorry on behalf of the rest of us for the mess that we've made of things. We're trying to fix it!
There's a middle ground in a lot of things but it seems like Europe is becoming very antagonistic with aggressively taxing US tech companies.
Either by intentional design or by lack of resources, both EU and US govs have a hard time winning this game of whack-a-mole when these megacorps have armies of top lawyers and consultants who's sole focus is finding legal ways to avoid paying taxes.
None of them want to give up these privileges, until now that is. Now that these are starting to have an impact at home, they have just started cleaning up.
They just decided to tax all alcoholic beers as alcohol, and thus the same as wine. Before that beers with very low alcohol content were treated as non-alcoholic beverages, which enjoy a lower VAT rate.
Makes no difference to Belgian beers, and France does produce quite a bit of beer as well (same or more than Belgium).
Oh by the way, note that by leaving the EU, the UK is effectively NOT impacted by those, ie. it is a direct trading advantage.
Boeing is a major employer, union stronghold (still), and in rough shape. It would be political suicide for Biden to throw them under the (Air)bus just to blanket-reverse every Trump-era policy.
"If you don't let us steal every bit of income we can while operating in your countries where your local companies don't have a value larger than the GDP of Switzerland or Mexico, then we will get angry at you for figuring out ways to make them pay the taxes they should pay. So we'll make sure to prop up our Boeing that is failing due to issues unrelated to you, and we'll slap random luxury goods taxes on it for some luck"
That's petty alright.
As pointed out elsewhere, the EU put taxes on Harley Davidson a few years back following the taxes on steel from the US. That was petty too.
FWIW same thing happened with Canada in the last few years with new tariffs both ways. Mostly petty too.
Maybe one day we'll figure out ways to try and nurture making everybody grow together rather than making everybody lose more. For all its faults, the EU is an attempt at that (internally, because we've got to start somewhere).
If other countries are propping up their industries, and we fail to respond, that's a disadvantage. There are also national security concerns. It's not all of one or the other, but there may be a balance and that's worth exploring further, I think.
If the vast majority of Americans are not benefiting from it, it's because of the concentration of wealth within US driven by domestic American policies, more than anything else.
The EU doesn't really have many tax regulations, so a country like Ireland might think "How else will I attract industry here?", and decide to allow companies to put a mailbox there in exchange for operating in the EU tax free.
This double-screws all other countries, first, because these companies pay zero taxes, so their tax contribution to the EU is zero. Second, because Ireland remains poor, because these companies pay almost zero taxes, so other countries need to send them money.
France didn't like this, so they introduced a tax that both French and non-French companies must pay (it is illegal in the EU to discriminate by country, so this tax affects French companies as well).
And that's pretty much it. This tax is high because it needs to compensate for the lack of taxes these companies pay in France, and for the money France needs to send to the tax heavens in which these companies operate.
TBH I hope other EU countries will follow France's example, and that at some point, when most countries have these rules in place to avoid getting double-screwed, the EU as a whole can agree on a set of regulations to forbid tax heavens within the EU.
Such a set of regulations needs a pretty high buy in from all EU countries (essentially unanimous consensus), and countries that cannot otherwise attract industry are incentivized to be against it.
With these new taxes, Tech companies will be more incentivized to move to the places in which it makes most physical sense for them to be, instead of a freaking mailbox in the artic. At that point, the incentive from Ireland and other tax heavens will be small, since there won't be any point for companies to move there in the first place.
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Also, while the EU usually negotiates as a front, the EU itself is a union, so it has little to absolutely no power over what any EU country does. Within the union, you have federation republics like Germany, presidental republics like France, monarchies with kings like Spain, and... without really stretching it... some EU countries aren't even democracies and are more like dictatorships. Point being, getting something done at the EU level requires widespread consensus, but the EU is extremely heterogeneous and consensus is really hard, which is why the EU gets nothing done, and why each country does whatever it wants. The EU doesn't even have a constitution.
It might be easy to criticize, e.g., the federal response to COVID in the US, but that's because people actually expected a Federal response to it, because there could have been one. In the EU, the federal response was almost non-existent, but nobody expected any because the EU has no power to do anything in this case. I don't really know whats worse.
In fact the US have tried to prop up (and placate) their wine producers since that because the Chinese market completely dried up for them. So I see these tariffs on European wine as killing two birds with one stone for the US government but not necessarily hitting European producers that hard (as said, at this point Chinese will buy as much wine as Europeans are able to sell them...)
It's gone from leading the world to being able to barely find 1-2 supporters in UN resolutions. I mean, it can barely find 2 countries of the tens of countries with populations smaller than Staten Island to support its resolutions in the UN.
The major problem for the US is that the administration has declared war on everyone, including allies. So it doesnt find any support, even from allies, because even if they agree with the US's action, they are worried that it will come back to bite them.
A classic example of this is that Trump spend years railing about China but only imposed tariffs on them more than 2 years into his administration. In the meanwhile, within months of assuming office, he had already imposed tariffs on Japan, much of Europe, Canada, Australia, etc...basically, all allies. So when time came to impose tariffs on China, none of the American allies were prepared to support the US, which meant the US had to go alone in imposing tariffs that turned out to be pretty ineffectual (China's net exports to the US are higher than ever) and further, have damaged US exports to China considerably by forcing them to find alternatives to American supplies (Brazil for soyabeans as an example, which had the wonderful knock on side effect of accelerating the destruction of the Amazon...).
Exports make up a small percentage of the economy, so it can afford to place high tariffs on imports to help develop domestic industries.
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).