Hello from Washington, where you join us to read the last DC-based version of this newsletter. It will continue in a geographically reduced form, and you will hear more soon.

At the same time, our main article today focuses on the trend that we are beginning to see traders frowning. This is the threat of the subsidy race, which could become the new Airbus-Boeing.

Concession waters Check the freight rates of Nordic routes.

The U.S. is brewing a storm due to trade

Joe Biden is quickly approaching his mid-term election period, and it is safe to say that his trade policy so far is not as confrontational as his predecessor. But it’s like protectionism.

The Office of the United States Trade Representative is rightly pleased that it has reached an agreement with Europe to suspend multi-billion-dollar tariffs on transatlantic trade.These transactions involve decades of Airbus-Boeing dispute (Now postponed), and the suspension of Trump’s controversial steel and aluminum national security campaign. In this sense, we can say that some protectionist policies have been suspended. None of these disputes are nearing end. Aircraft subsidies are the subject of ongoing dialogue, and there is hardly any work on metals to discuss how the two sides will make steel green. In addition, instead of resuming duty-free trade, there are quotas. In any case, the tariffs are now gone.

But on the horizon, dark clouds are brewing.The first and most pressing issue is the threat to the U.S.-Mexico-Canada trade agreement Biden’s electric vehicle tax credit compositionCanada has threatened to suspend parts of the agreement (especially the part of the dairy product quota it believes the United States likes and considers preferential) in retaliation for tax credits. Ottawa also threatened to impose tariffs on the U.S. auto industry and plans to publish a list of products recommending further tariffs.

It’s worth pointing out that the U.S. tax credit program is still Bills not yet passed, And can change the form. So far, despite fierce lobbying by Canadian and Mexican officials, Hill does not appear to have made any substantial efforts to change it. Europe also expressed dissatisfaction with the proposal. European Union Trade Director Valdis Dombrovskis (Valdis Dombrovskis) Suggestions Does not comply with the rules of the World Trade Organization.

Another looming issue is the issue of chip subsidies. So far, the United States and the European Union have agreed that subsidizing their semiconductor industry is a good idea.The United States proposes to invest billions of dollars to promote domestic chip manufacturing, and the European Union is Floating similar planThe two parties stated that they stay in touch on how best to do this to avoid subsidy competitions, as Margrethe Vestager, the head of EU competition affairs, pointed out to the Financial Times, This is “a waste of taxpayers’ money”. European subsidies will be “appropriate, proportionate and necessary”, while the United States “is establishing a legal basis for subsidies.” However, in Washington, European diplomats began to worry about this issue. Some people lamented that it might become the “new Airbus-Boeing”.

What about the WTO? Then, the WTO may be a good place to discuss this issue. However, the time when the United States cares about what is WTO-compliant and what is not WTO-compliant may be gone forever. The United States just blocked the appointment of judges of the Appellate Body for the 48th time. Officials from the Office of the United States Trade Representative said they are concerned about the WTO and WTO reforms, and they said they are concerned about completing fisheries negotiations. But when trade diplomats in Geneva try to reach a consensus on this topic, it is unlikely that there will be any fish in the sea. At the same time, in Washington, Europeans are talking about a new subsidy race.

Just like Simon Lester, formerly a member of the Cato Institute think tank and currently working for the news website China Trade Watch, Pointed out on Twitter, The Biden administration seems to want more room for protectionist policies, and at the same time opposes European regulations such as the fledgling Digital Market Act, which it believes has “disproportionately” affected American companies.

In fact, it seems that any effort to regulate or tax American technology companies will prompt Washington to accuse any government that happens to try to enact its own sovereign law or tax system for unfair discrimination. (The United States is also angry with other countries levying digital service taxes). However, Washington itself wants to be able to freely subsidize and stimulate industries of its choice (such as electric cars or chips).

When it comes to Europe, legacy issues such as Airbus-Boeing and steel may have been covered up. But as the United States continues to pursue its new doctrine of self-reliance and a secure supply chain, the contradiction may eventually reach its peak, and bigger problems—problems that may fundamentally challenge global trade rules—are ahead.

Concession waters

Yesterday’s trade secret pointed out that despite the dramatic drop in container shipping costs on the highly anticipated Far East to West Coast route, travel on other world trade arteries is still as expensive as it was a few months ago. Two of these routes involve Northern Europe.

We used data from shipping data companies Xeneta and Compass Financial Technologies to map the price of shipping 40-foot containers on these arteries. We are not sure why they have not yet seen the same waterfalls as seen on the route from the Far East to the West Coast of the United States. If you do, please contact. Claire Jones

Trade ties

Washington Haven’t learned the real lesson yet China shock, according to This Bloomberg article.

Martin Sandbu joins us in supporting the world’s manufacturers in their efforts to meet the Consumer durables. His works — Shortage, what is the shortage? ——Very worth reading.

European gas prices Yes Rise again Behind the worry Ukraine.

optimal Japanese clothing manufacturer will Transfer (Nikkei, $) Most of the production is from China and Vietnam In the next three to five years, due to the weakening of the yen, the pressure of overseas labor costs and difficulties in shipments.

Thailand Targeted (Nikkei, $) This year’s food exports are about 30 billion U.S. dollars, but there is a shortage of migrant workers from China Myanmar, Cambodia and Laos This goal has been out of reach. Amy Williams and Francesca Regalado