Trump Beneficiaries Turn Free-Trade Lobbyists as Tensions Rise

(Bloomberg) -- Two of the major beneficiaries of President Donald Trump’s tax overhaul rallied against his trade policies, becoming lobbyists for free markets after tariffs announced by the U.S. escalated tensions with allies.

Planemaker Boeing Co. and American Airlines Group Inc., aviation giants that have both channeled funds from Trump’s tax cuts into their workforces, raised concerns about a trade conflict that could impact the movement of cargo and people.

On Friday, the U.S. imposed tariffs on steel and aluminum from the European Union, Canada and Mexico, all of which announced they would hit back with their own duties.

“We’re fans of global trade and free trade, so we always get concerned when you start to see tensions escalate,” said Doug Parker, American Airlines’ chairman and chief executive officer. “It’s certainly the kind of thing that you watch and hope that countries are able to work together and keep global trade flowing.”

American in January joined a tide of companies offering employees $1,000 bonuses to mark the tax overhaul Congress put in place for 2018. Parker voiced his concerns over trade in Sydney, where he’s attending the International Air Transport Association’s annual meeting.

Boeing, the Chicago-based maker of commercial jets, said at the same meeting it will push for open and fair trade after Trump announced duties on steel and aluminum imports from some of America’s allies on national security grounds -- even though the tariffs won’t really hurt the company.

“We’re going to continue to advocate that open and fair trade is the path we’d want to see the market headed,” sales chief Randy Tinseth said in an interview in Sydney. Boeing sources 90 percent of its aluminum from the U.S., he said.

Earlier this year, China, one of the biggest consumers of Boeing’s planes, threatened penalties on older models of the 737. The tariff threats haven’t been implemented.

The tensions have clouded a benign outlook for the global economy, which is on track to grow at its fastest pace since 2011 this year and next, according to the International Monetary Fund.

Open Borders

“The strength of the airlines heavily depends on the fact that borders are open,” Alexandre de Juniac, the chief executive officer of IATA, said Sunday in an interview in Sydney. “If you close the borders to passengers, to people and to trade, it’s a problem for us. It worries us.”

The U.S. and Europe, typically closely cooperating trade partners, are also sparring over plane manufacturing after the World Trade Organization this year found that Airbus had failed to sufficiently roll back subsidies for its two biggest aircraft. While the U.S. is threatening tariffs if an adequate settlement can’t be reached, the EU is holding out for the result of its counter case against Boeing in which the EU is challenging billions of dollars in U.S. tax incentives for the Chicago-based planemaker.

“Aviation is a very global market,” Guillaume Faury, the chief salesman of European planemaker Airbus SE, said in Sydney. “It relies on the free movement of people and the ability to be an open market. Trade war is not something positive. I don’t think it’s positive for anybody, by the way, but also not for aviation.”

China said Sunday all progress made so far in talks with the U.S. over trade will be for nothing if Trump carries out his threat to impose tariffs. Chinese negotiators had met with a U.S. delegation led by Commerce Secretary Wilbur Ross in Beijing during the weekend.

The Trump administration’s shifting stance on China may complicate Ross’s ability to extract concessions from Beijing. Trump announced the U.S. will forge ahead with a plan to slap tariffs on $50 billion of Chinese imports just 10 days after the two reached a truce in Washington. China slammed the “flip-flop,” vowing to hit back should the U.S. tariff threat materialize.

©2018 Bloomberg L.P.