Friday, June 22, 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 Bay workforce development initiative looks to Houston for lessons

Tampa Bay workforce development initiative looks to Houston for lessons

The biggest hospitals in Houston had a problem.To earn a prized institutional certification, they needed more nurses with bachelor of science degrees in nursing.But local colleges were more focused on turning out nurses with two-year degrees who, to ...
Published: 06/22/18
Health care IT company CareSync shuts down, laying off 292

Health care IT company CareSync shuts down, laying off 292

TAMPA — The days ahead were supposed to be bright.For weeks, the future of health care tech company CareSync had been thrown into question as founder and CEO and founder Travis Bond unexpectedly departed, kicking off multiple rounds of layoffs. But t...
Published: 06/22/18
Coal and gas hold onto their share of electricity production, despite massive push for renewables

Coal and gas hold onto their share of electricity production, despite massive push for renewables

Here’s an intriguing set of facts: Coal produces the same percentage of the world’s electricity as 20 years ago. Oil and gas remain about level, too.Same for nonfossil fuel sources. In other words, the massive push towards renewables over the past co...
Published: 06/22/18
Brink: Why have Florida’s working-age men left the labor market in droves

Brink: Why have Florida’s working-age men left the labor market in droves

A cancer lurks within Florida’s otherwise rosy job numbers, one that’s been called a quiet catastrophe and an intractable time bomb.Too many men between the ages of 25 and 54 have stopped working.Economists call those the prime-age years. Incomes gen...
Published: 06/22/18
Pride divided no more: St. Pete Pride comes back together

Pride divided no more: St. Pete Pride comes back together

ST. PETERSBURG — The 16th annual St. Pete Pride Parade is getting ready to march along the downtown waterfront the second straight year. But many hope to move past the division caused last year when the parade was uprooted from its original hom...
Published: 06/22/18
For sale: A Tampa Bay area elementary school where you can eat tacos and buy wine

For sale: A Tampa Bay area elementary school where you can eat tacos and buy wine

ST. PETERSBURG — For sale: a 104-year-old elementary school with restaurant and wine shop. It even has a title company where you can close the deal.Less than a year after completing a major renovation of the historic North Ward school, developer Jona...
Published: 06/22/18
Domain Homes: Buyers love them, some others don’t

Domain Homes: Buyers love them, some others don’t

TAMPA — When the 2008 financial crash brought down the nation’s housing market, hundreds of home builders went out of business. Among them was Sharon McSwain Homes in Atlanta, forced to liquidate in 2009.But just as developers like to develop, builde...
Published: 06/21/18
Updated: 06/22/18
Armature Works developers sue Ulele and city of Tampa over use of nearby building

Armature Works developers sue Ulele and city of Tampa over use of nearby building

TAMPA — Two of the city’s hottest developers — the companies behind Ulele and the Armature Works — are heading to court over control of an old city building that sits between the hit eateries. Both want to redevelop the city&...
Published: 06/21/18
Orlando airport first to scan faces of U.S. citizens on international flights

Orlando airport first to scan faces of U.S. citizens on international flights

Associated PressFlorida’s busiest airport is becoming the first in the nation to require a face scan of passengers on all arriving and departing international flights, including U.S. citizens, according to officials there. The expected announcement T...
Published: 06/21/18
Saboteur or whistleblower? Battle between Elon Musk and former Tesla employee turns ugly, exposing internal rancor

Saboteur or whistleblower? Battle between Elon Musk and former Tesla employee turns ugly, exposing internal rancor

Hours after Tesla had sued its former employee on charges he had stolen company secrets, and days after chief Elon Musk had called him a saboteur, the Silicon Valley automaker made a startling claim. The company had received a call from a friend of t...
Published: 06/21/18