“Biggest Case In WTO History”: Europe Prepares Legal Challenge Against Trump Border Tax

Monday, February 13, 2017
By Paul Martin

by Tyler Durden
ZeroHedge.com
Feb 13, 2017

Two weeks ago we looked at the immediate fate of the proposed border tax adjustment, and said that two wars are about to break out: one is domestic, and involves exporter (GE and Boeing) vs importer (WalMart and Koch Brothers) alliances and trade groups; this war will shift into the Senate, where Republicans can afford to lose at most 2 Senators, yet where as many as 6 are on the fence already (with 3 voicing a negative opinion toward BAT). The second war, we predicted, is one which would break out after the BAT is passed, and it would hammer – at least in the first few years – America’s biggest trading partners. And since the impact of the latter would be to force prices of the vast majority of retail goods sold in the US to soar, leading to a big jump in core inflation, eventually leading to a surge in the US Dollar – even if one ignores the diffuse effects and pervasive on global trade – the BAT would have an immediate impact on Fed policy, interest rates, and ultimately, prices of risk assets.

As it turns out, the second war did not even wait for the formal passage of the border adjustment tax, because as the FT reported this afternoon, the EU and other US trading partners have begun preparing for a legal challenge to a US border tax proposal in a move that “could trigger the biggest case in World Trade Organization history.”

The reason is that “the EU and other US trading partners are worried about the impact on their exports and have been deploying lawyers with a view to eventually challenging it before the global trade watchdog. “

The move to block the BAT come as Congressional Republicans are working to convince President Donald Trump to back a major shake-up of the US corporate tax system that would include a new “border adjustment” system. It would see US imports subject to tax and export revenues exempted, in what the FT, us and everyone else has dubbed “the biggest shake-up in the global corporate tax system in almost a century, according to tax experts.”

And as such, America’s trade partners have finally pushed the panic button realizing that their exports to the US would likely suffer substantially, and as a result, they are taking their case to court.

The Rest…HERE

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