The election of Donald Trump and the UK’s vote to quit the EU were the seismic political events of 2016. Often compared as popular revolts against liberal elites, big government and open immigration, the billionaire celebrity’s administration and Brexit are, in fact, sending their countries on very different courses. Each could be damaging to aviation.
Trump’s instincts are protectionist. He wants to penalise importers that destroy American jobs. He has signalled the USA’s withdrawl from the Trans-Pacific Partnership trade agreement and threatened tariffs on goods made in Mexico and sold in the USA – including components that end up on US-assembled aircraft.
Although he has not named Airbus, foreign-built airliners too could fall foul of America First policies. He may also be sympathetic to calls to restrict access to “subsidised” Gulf carriers and Norwegian’s long-haul Irish subsidiary, accused of circumventing labour laws.
But “protecting jobs” by imposing tariffs on imports rarely works, simply rewarding inefficiency and fuelling inflation. Similarly, airline deregulation has been one of the successes of the modern era, boosting competition by bringing down entry barriers and fares.
By contrast, Prime Minister Theresa May’s government favours free trade. It paints Brexit as an opportunity for the UK to forge open relationships with nations around the world – including the USA. However, an acrimonious divorce settlement with Brussels could make life difficult for UK exporters selling into what is currently their biggest market – Europe.
While this has implications for the dominant service sector, there is a big threat to Airbus UK. Its wing plant and the supply chain serving it are enmeshed into the Airbus production system. As the airframer’s Tom Williams warns, customs regulations and restrictions on movement of talent could have drastic consequences.
Its headquarters may be in Toulouse, but Airbus – along with the likes of Rolls-Royce and Jaguar Land Rover – is the pride of UK manufacturing. While leaving the single market would not force the closure of Broughton and Filton overnight, it could impact future investment decisions by Airbus, including where to develop and build wings for new programmes.
The outcomes of 23 June and 8 November shook the world. Here’s hoping that by pursuing policies they think will please their eager-for-change electorates, these new leaders do not end up damaging the very economies the people have entrusted them with.
Source: Flight International