The White House has said in the past, that once the Chinese deal is done, they are going after the EU next for its large trade deficit with the US, which was $169 billion in 2018. Lately there has been some easing of the aggressive tone and apparently Wilbur Ross has been speaking with the EU about a possible alternative for tariffs. (?) We are not sure how that will go, but perhaps the fact that the US won the largest WTO levied fine in history against the EU ($7.5 billion) may have something to do with it. But there is an interesting sidebar to that fine. Remember that fine took 13 years to play out.
In the last 25 years multinational firms in Europe have made some 36 investment deals in the US worth $8.5 billion in subsidies and tax deals from various state and local municipalities. Airbus is one of those firms, as they employ some 4,000 people in Alabama and gain some $158 million in subsidies. Alabama is one of the “right to work” states. That means workers can avoid unions and the protections and support they provide. There are now 27 “right to work” states. Of the 36 deals European companies made, some 18 of them are in six of the “RTW” states. Many of them are located in the South, like Alabama, Arkansas, Florida, Georgia, Mississippi, South Carolina, and Tennessee. But these state by being aggressive with attracting jobs, they give out subsidies or tax breaks. This brings jobs, but also lowers education, health, development and living standards. Alabama is responsible for $1.7 billion of the $8.5 billion in subsidies that have been given out.
It may be no surprise that a portion of these “right to work” states are in the Midwest as well. Indiana, Iowa, North and South Dakota, Kansas, Michigan, Nebraska, Oklahoma and Wisconsin. Isn’t there another way to attract jobs than to degrade human capital? The Federal government looks at attacking outside the borders, but what about looking within to provide help? Like working on building up physical and telecommunication infrastructure. Use the tariff money, not just to give out handouts, but to make a real difference for the long term success for the part of the country that most needs, it.