Friday, September 21, 2018
Business

Why Europe and Canada may retaliate against bourbon, Harleys and Levi jeans

PARIS - Slap tariffs on Kentucky bourbon? Halt distribution of Hollywood movies? Block U.S. companies from bidding on foreign government contracts?

These are the kind of measures being suggested in Europe and Canada as they face the prospect of substantial tariffs on their steel and aluminum industries proposed last week by President Donald Trump.

But trade experts say that retaliation is a fine art, where the goal is to inflict as much economic and political damage on your opponent while not doing your economy too much harm. In economies as well-integrated as the United States and Europe or the United States and Canada, it’s likely to prove a challenge.

Read More: That time USF almost built the world’s largest concrete sculpture with Pablo Picasso

"It’s increasingly difficult to find areas of U.S. imports that we can do without or where we can provide a domestically manufactured substitute," said Royce Mendes, a senior economist at CIBC Capital Markets in Toronto.

Jean-Claude Juncker, the president of the European Commission, said that if Trump goes ahead with the proposed tariffs of 25 percent on U.S. imports of steel and 10 percent on aluminum, the European Union will respond by imposing tariffs on American products such as Harley-Davidson motorcycles, Kentucky bourbon and Levi’s blue jeans.

"We can also do stupid," Juncker said, speaking on German television.

His list hit both prime examples of classic Americana and products manufactured in the home states of key Republican leaders, such as Senate Majority Leader Mitch McConnell, Ky., and House Speaker Paul Ryan, Wis.

"Those were just examples," said a European official, speaking on the condition of anonymity to discuss ongoing negotiations. "The list has been in preparation for some time, and of course more products are potentially to be targeted. Basically, it’s more or less one-third agricultural products, one-third steel- and aluminum-related products, and one-third other products."

Economists said those particular products nevertheless serve a politically expedient purpose.

"It’s clear that what the EU at this stage wants to do is to hit politically sensitive areas and districts in the U.S. in the hopes that those districts, which have an interest in trading with the EU, would then weigh on the decision in Washington," said André Sapir, a trade expert and former adviser to the EU’s directorate general for economic and financial affairs.

"It’s to try and change the course of the decision, which has not yet been taken."

While Canadian companies and governments argue for exemptions from the levies, there’s increasing recognition that Canada will not escape the tariffs even if its industries are the primary, if unintended, targets of Trump’s protectionism.

Canadian Prime Minister Justin Trudeau has already called the proposed tariffs "completely unacceptable," and Canada’s foreign minister Chrystia Freeland has warned that Canada "will take responsive measures to defend itself."

The problem for the Canadian government is to find ways to retaliate "that will hit American interests the most and Canadian interests the least," said Gordon Ritchie, who helped Canada negotiate its original free trade agreement with the United States in the late 1980s and was involved in North American Free Trade Agreement talks as well. Even though there could be costs to Canadian consumers, the government has no choice politically but to hit back "very fast and very hard."

Ritchie compares the process to facing down a newly arrived schoolyard bully. You don’t want the bully to think you’re an easy target and repeatedly take advantage of you, he said.

Ritchie said that going after California wine, Kentucky bourbon or Harley-Davidson motorcycles are good options because "they’re high-profile and they’re iconic." And at the same time, Canadian consumers still have a plethora of choices for alcohol or motorcycles. He also suggested blocking distribution of U.S.-made films in Canada, but he acknowledged the risk of provoking a domestic backlash.

Matthew Kronby, a Toronto trade lawyer and former government negotiator, doubts California wine would be a good target because it’s from a blue state. He thinks Ottawa is looking to penalize "goods from red states that supported Trump, that are going to cause economic pain to people who are close politically to Trump." Kronby suggested agricultural products as a likely target.

Kronby also said that Canadian officials may have to impose "safeguard" measures to protect their country’s steel and aluminum industries from being flooded with products originally intended for the United States but diverted to Canada. Those measures could include temporary tariffs and quotas.

Another alternative would be to ban U.S. companies from bidding on Canadian defense and infrastructure contracts, Mendes, the economist, said. The advantage to that approach would be that Canadian consumers wouldn’t feel the impact in their wallets.

When Boeing launched a complaint against Bombardier, claiming the Canadian company had benefited from unfair government subsidies in the production of its C Series jet, the Canadian government retaliated by saying it wouldn’t consider buying fighter jets from Boeing.

That dispute was effectively settled in January, when the U.S. International Trade Commission voted that Boeing was not harmed by Bombardier.

Comments
Tampa General nurses record the last heartbeats of dying patients, making a family memory

Tampa General nurses record the last heartbeats of dying patients, making a family memory

TAMPA — As John Reisinger waited with family at Tampa General Hospital, grief settled in like a fog. So some of the details are hazy.But he remembers the moment when three women in white lab coats approached him.The day before, his niece, Jessica Rau...
Updated: 7 hours ago
Retro Fitness sets first of several area locations in Citrus Park

Retro Fitness sets first of several area locations in Citrus Park

In early fall, Retro Fitness will open a 17,000 square foot fitness facility in Citrus Park, and it plans for more Tampa Bay area locations.Founded in 2005, Retro Fitness has 153 clubs throughout the United States and is the official fitness center o...
Updated: 9 hours ago
Joe and Son's Olive Oils, a legacy Ybor business, finds new roots in Carrollwood

Joe and Son's Olive Oils, a legacy Ybor business, finds new roots in Carrollwood

Andrea Gebbia grew up in Carrollwood, and now she is bringing the family business to the neighborhood of her youth.In late fall, Joe and Son’s Olive Oils is slated to open a second location."I feel so blessed having the ability to grow my...
Updated: 10 hours ago
The guys who brought you Tampa’s Armature Works plan high-end offices next door, and they’ve already signed a lease with med-tech company AxoGen

The guys who brought you Tampa’s Armature Works plan high-end offices next door, and they’ve already signed a lease with med-tech company AxoGen

TAMPA — Coming soon from the developers who brought you the Armature Works: Heights Union, two high-end office buildings next door to the trendy food hall, event space and co-working complex overlooking the Hillsborough River.Developers said Friday t...
Updated: 10 hours ago
Chi Chop + Kung Fu Tea looks to succeed where others failed

Chi Chop + Kung Fu Tea looks to succeed where others failed

RIVEVIEW – Amy Lin knows that her newest Chi Chop + Kung Fu Tea store is in a location where previous businesses have not lasted.The short-lived Tap’s Brewhouse & Deli and even shorter-lived Top Shelf Sports Bar and Grill tried to r...
Updated: 10 hours ago
Walmart is teaming with a Seminole Heights chef to promote locally grown mushrooms

Walmart is teaming with a Seminole Heights chef to promote locally grown mushrooms

TAMPA — It might seem like an unlikely match from the outside: A distinguished chef with a restaurant known for inventive plates using produce shoppers can find at… Walmart?Walmart, the country’s largest grocer, is known for having a core consumer wh...
Updated: 10 hours ago
Federal loans open to Pinellas businesses struggling against Red Tide

Federal loans open to Pinellas businesses struggling against Red Tide

The U.S. Small Business Administration has extended its disaster loan program to include Pinellas and Pasco county businesses affected by Red Tide.Already, the Pinellas County Economic Development Office was taking applications for bridge loans to he...
Updated: 11 hours ago
Watch: A southern white rhinoceros calf just a week after being born at ZooTampa

Watch: A southern white rhinoceros calf just a week after being born at ZooTampa

TAMPA — A southern white rhinoceros gave birth to a calf at ZooTampa on Sept. 12, marking the sixth successful birth of the species in the zoo's history. In a news release, ZooTampa said southern white rhinoceroses are a nearly threatened spec...
Updated: 11 hours ago
Baggers, cashiers soon can grow beards at Publix

Baggers, cashiers soon can grow beards at Publix

ORLANDO — The faces of baggers, cashiers and stockers at a Florida-based grocery chain may look slightly different in the near future.That's because Publix said Friday that it would start allowing workers to grow beards and other facial hair b...
Published: 09/21/18
They spent $15,000 adding a driveway to their St. Pete House. Now the city says they can’t park on it

They spent $15,000 adding a driveway to their St. Pete House. Now the city says they can’t park on it

ST. PETERSBURG — One day in January, Dana Cremo was on her front porch hanging a vintage screen door when two city employees walked up. "You can’t park on your driveway," they said. "Why?" she asked. "Because somebody filed a complaint," they said. F...
Published: 09/21/18