Tariffs, taxes, and takeoffs

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It's no small matter that the Federal government has imposed a nearly 300% tax on airplanes imported from Canada. The new extreme tax may be called a tariff, but it's effectively a tax on everyone who flies commercial aviation.

And as with most taxes, there are unintended consequences playing out. One is that the tax set in motion a partial merger between Bombardier (the Canadian airplane manufacturer targeted by the import tax) and Airbus, the European airplane manufacturer that already has facilities in the United States. That merger will help them get around the tax.

But that merger is also frightening Boeing into a what could be a brand-new merger with Embraer, a Brazilian airplane manufacturer. You see, the whole tax was Boeing's idea -- even though it never made airplanes to compete with Bombardier in the first place! The resulting Bombardier-Airbus merger has apparently frightened Boeing so much that they went chasing after Embraer.

The sad part to all this is that a bunch of manufacturers are trying to build new regional jets right now -- the very kinds of airplanes you're quite likely to fly if you go in and out of Des Moines, Cedar Rapids, or Omaha. That competition includes a very promising new plane from Japan, built by Mitsubishi.

But if Boeing and Airbus are just going to gobble up smaller aircraft makers, that ultimately means less competition among manufacturers -- and that's almost never good for the final customers...passengers like you and me. And it's all because of a silly and pointless attempt to shut down imports from Canada, our closest ally, biggest trading partner, and most extensive neighbor.

When governments start trade wars, it's the customers who usually pay the most. Maybe this will all turn out for the best, but that would be contrary to most historical precedents.

Brian Gongol

Brian Gongol

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