Quote:
Originally Posted by OLD BOY
You assume that the imposition of tariffs by the EU would mean that we would still want to have those goods from the EU. What if we could get the same goods from the US, cheaper and with no tariffs?
I don't know the answer to this, but if we are making more from imposing tariffs on the EU, what's to stop us using that money to reduce nullify any price increase to the consumer?
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If there's no FTA, the EU will have to impose their WTO MFN rate on our exports to them and we will have to impose our WTO MFN rate on imports from them, the same as we do with the US now. To have no tariffs for imports from the US or anywhere else, we need an FTA otherwise the MFN rate needs to be used.
In a lot of cases, we could 'shop around' for a cheaper deal if the cost plus duty is less than an import from the EU but this is 53% of our imports. The burden is huge.
We certainly could subsidise imports if we wanted. However, these would need to apply across the board and not just imports from the EU. If we decide that only certain countries imports are subsidised then WTO rules step in and our exports to countries not in the subsidy list can get slammed for additional duties (countervailing duties)