A further escalation of the trade war on the EU front is now a possibility.

This follows a recent WTO ruling clearing the path for US retaliatory tariffs as a result of EU subsidies given to Airbus.

This is a 15 year old case which started on 6 October 2004 when the US requested consultations with the Governments of Germany, France, the UK and Spain, and with the European Communities concerning measures affecting trade in large civil aircraft.

In other words, Airbus got a big free kick from the EU and used it to beat up Boeing.

You can read about the estimated tariff metrics and the EU’s so-called parallel claim here.

But, the timing of this ruling is impeccable.

The idea that the White House can punish the EU (more correctly the ECB) for restarting QE and lowering interest rates and the euro, which in turn makes US exports look more expensive in comparison, must be like extra pickles and relish on a White House cheeseburger. Way too hard to look the other way…..

If the WTO was looking for a way to escalate the trade/currency war on multiple fronts, it could not have pickled a better tariff burger.

Stay tuned.

Mike.

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