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Tiffany’s $16 Billion Sale to LVMH Falls Apart in Face of Pandemic, Tariffs

Last November, LVMH Moët Hennessy Louis Vuitton, the world’s largest luxury goods conglomerate, announced plans to acquire Tiffany & Company, the American jeweler founded by Charles Lewis Tiffany in 1837 and famed for its duck egg blue boxes and diamond engagement rings.

The transaction, worth more than $16 billion, was set to be the largest ever in the luxury sector. LVMH’s chief executive, Bernard Arnault, said that Tiffany would “thrive for centuries to come” as part of his portfolio of premium brands, which includes Louis Vuitton, Dior and Givenchy.

Nine months later, the agreement is in tatters. On Wednesday, LVMH said that it was pulling out of the deal, citing a highly unusual request by the French government to delay the closing as well as the damage caused to the luxury industry by the pandemic. In turn, Tiffany sued the luxury giant in an effort to force the deal through.

Tiffany is now facing several uncomfortable prospects beyond its expensive looming legal battle with LVMH: The deal may eventually be completed, potentially at a discounted price, or Tiffany could remain a stand-alone company looking for a buyer once more, in a much less certain world.

The battle brewing between two of the biggest names in global luxury is one the most prominent examples of the fracturing of deals agreed to before the pandemic devastated retailers. In May, the sale of the lingerie brand Victoria’s Secret to the private equity firm Sycamore Partners fell apart.

Credit…Stephen Speranza for The New York Times

On Wednesday, LVMH said in a statement that it could not complete the deal with Tiffany “as it stands,” citing a request from the French government on Aug. 31 to delay the deal beyond Jan. 6 because of the threat of U.S. tariffs on French goods.

Tiffany, in a lawsuit filed Wednesday in the Delaware Court of Chancery, said that LVMH had breached its merger obligations by excluding the retailer from its discussions about the transaction with the French government. In a securities filing, Tiffany said that although LVMH had informed the jeweler that it had received a letter from the French government, the jeweler had not yet seen an original draft of that letter.

In a call with reporters, LVMH’s chief financial officer, Jean Jacques Guiony, balked at a question about whether LVMH had solicited help from the French government to exit the deal.

“Are you seriously suggesting that we procure the letter?” he asked. But he later added: “It was fully unsolicited. It doesn’t mean that we didn’t do anything after we received” the letter.

The United States has been threatening tariffs on luxury French products in retaliation for France’s taxes on technology companies that have hit U.S. giants like Amazon, Facebook and Google. Uncertainty over the tariffs has complicated the deal market, but it remains unclear what the exact impact to LVMH would be — and whether the tariffs in question would even go into effect.

“Tariffs are political tools that can be flipped on and off with no notice,” said Scott Lincicome, a senior fellow at the Cato Institute, a think tank. “And because we don’t know who the president is going to be in January 2021, that adds fuel to the uncertainty.”

Speculation had been brewing for months over whether LVMH would try to renegotiate its multibillion-dollar deal with Tiffany as the pandemic wrought havoc across the global luxury business and slashed the jeweler’s sales.


Credit…Gonzalo Fuentes/Reuters

The takeover agreement in November had come after months of tense talks between the two sides. LVMH, which had coveted the jeweler for years, was persuaded to raise its offer several times; approval was finally given to a $135-per-share offer, translating to an equity value of around $16.2 billion. Some analysts noted it as a top-of-the-market price.

Still, LVMH initially trumpeted the deal as a coup. The acquisition would consolidate its position as a major player in the hard luxury sector, an industry label given to watches and jewelry products. It would potentially double the size and profitability of its portfolio in that category, which includes brands like Bulgari, Chaumet, Hublot and Tag Heuer, and accounts for roughly 9 percent of total LVMH sales.

Mr. Arnault, long considered the most aggressive and acquisitive deal maker in the industry, was already expanding beyond traditional soft luxury goods like clothing and leather goods. He had overseen a buyout of the Belmond hospitality group in December 2018 for $2.6 billion, and took a majority stake in the German luggage brand Rimowa for $719 million in 2016.

With Tiffany, LVMH would also have gained its most significant beachhead in North America. Few jewelers can claim as much of a hold on American culture as the company, famously memorialized by the book and movie “Breakfast at Tiffany’s.”

Tiffany experienced a rocky road in recent years, with a series of board upheavals as it struggled to turn around falling sales. But under the current chief executive, Alessandro Bogliolo, and the artistic director Reed Krakoff, it has turned its fortunes around, fueled by revamped product offerings and savvy marketing campaigns positioned at younger shoppers. The company invested in a face-lift for its landmark Fifth Avenue flagship store in New York and in greater expansion in China.

Inside Tiffany, the hope was that the deal would leverage LVMH’s presence and expertise in China to help it grow further in that country, where consumers have long powered the growth of global luxury. By becoming a privately held company, the jeweler would also be able to focus on long-term brand building rather than short-term profits and shareholders.


Credit…Vincent Tullo for The New York Times

That was before the pandemic caused demand for luxury goods to plummet, with lockdowns prompting widespread shutting of boutiques and department stores and a flatlining of international travel. According to estimates by Boston Consulting Group, global luxury sales are set to contract 25 percent to 45 percent in 2020, with a slow recovery that could take up to three years.

LVMH said second quarter sales fell 38 percent on a like-for-like basis to 7.8 billion euros, or $9.2 billion, after a 17 percent decline in the first quarter. Tiffany’s global net sales fell 29 percent in the quarter that ended July 31, though that was a considerable improvement from a 45 percent drop reported the previous period. Mr. Bogliolo, the chief executive, said that increased sales in mainland China and global e-commerce had accelerated a return to quarterly profitability.

Despite the better-than-expected results reported by Tiffany, the allure of clinching the jeweler after almost a year of wrangling — and in the face of a gloomy forecast for global consumer spending — appears to have lost its luster for LVMH.

“This turn of events is not totally unexpected,” Luca Solca, an analyst at Sanford C. Bernstein, wrote in a note to investors. “Covid-19 has caused second thoughts on a number of proposed deals and the prices they were agreed at. It seems that this is no exception.”

Tiffany’s lawsuit outlined the crumbling of the deal over the past six months. In mid-March, LVMH sought to renegotiate, according to the complaint. In May, LVMH’s most senior management began cutting off all informal discussions with senior Tiffany personnel, the suit claimed, while in early June, LVMH wrote to Tiffany, citing “the pandemic and the current protests and civil unrest in many cities” as among its concerns in the deal.

Tiffany decided to sue LVMH over frustration that nine months after the agreement, the conglomerate had not yet filed for antitrust approval in the European Union, a person familiar with the deal said.

If LVMH succeeds in walking away from the takeover agreement, Tiffany will probably have to chart its own path without a buyer, given the global uncertainty facing retail.

Michael J. de la Merced contributed reporting.

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China’s Exports Are Surging Despite Tariffs and Coronavirus

ZHONGSHAN, China — This was supposed to be the year that China’s export machine began to stall. President Trump had imposed broad tariffs on Chinese goods. Countries like Japan and France pushed companies to shift production from China. The pandemic had crippled China’s factories by the end of January.

Instead, China Inc. has come roaring back.

After reopening in late February and early March, China’s factories began an export blitz that is still gaining steam. Exports soared in July to their second-highest level ever, nearly matching the record-setting Christmas rush last December. The country has grabbed a much larger share of global markets this summer from other manufacturing nations, entrenching a dominance in trade that could last long after the world begins to recover from the pandemic.

China is showing its export machine cannot be stopped — not by the coronavirus and not by the Trump administration. Its resilience lies not only in the country’s low-cost, skilled labor and efficient infrastructure but also in a state-controlled banking system that has been offering small and large businesses extra loans to cope with the pandemic.

The pandemic has also found China better placed than other exporting nations. It is making what the world’s hospitals and housebound families need right now: personal protection gear, home improvement products and lots of consumer electronics.

At the same time, demand has withered for many big-ticket items exported by the United States and Europe, like Boeing and Airbus jets. And with most economies except China’s now mired in recessions, demand has also faltered for the commodities that most developing countries export, particularly oil.

Families all over the world are sprucing up the homes they are now stuck inside. They have been buying everything from computer screens and stereo systems to power tools and home saunas — many of which are made in China.

Credit…Andrea Verdelli for The New York Times

Hongyuan Furniture in the southern city of Guangzhou has hired 50 extra workers after export orders for its home saunas more than doubled this year. A short drive farther south in Zhongshan, Star Rapid has stayed profitable, making robot casings and quickly producing high-tech models — a process known as rapid prototyping. And a few miles to the west, Trueanalog has ruled out moving production of its top-end stereo speakers to the United States, its main market, or to Vietnam, where wages can be even lower.

At Trueanalog, rows of workers at long, green tables under fluorescent lights meticulously assemble audio speakers for professional recording studios in the United States. China dominates the world’s production of the components that go into the speakers they are putting together — whether magnets, paper cones or rubber foam.

“China has the largest supply chain of the parts you need to make a speaker, and China has the most stable, affordable labor force,” said Philip Richardson, the American owner of Trueanalog.

Star Rapid, the prototype maker, has benefited from Chinese loans. Within days of the start of the pandemic, the state-controlled Bank of China called Gordon Styles, the company’s British chief executive and owner, and strongly urged him to take a $1.4 million corporate loan at low interest, which he did even though the company was still profitable. Chinese authorities also granted the company a rapid-fire series of partial rebates on taxes and government-mandated benefit costs that together exceeded 3 percent of the company’s sales.


Credit…Andrea Verdelli for The New York Times

Credit…Andrea Verdelli for The New York Times

Credit…Andrea Verdelli for The New York Times

“They wanted to make sure the good companies, as they measure that, don’t fail for lack of a bit of cash,” he said.

The strength of China’s export machine complicates the Trump administration’s push to reduce the trade deficit — the gap between what the United States exports and what it imports. Mr. Trump points to the deficit as proof that unfair practices by China have been hurting the United States, and has campaigned on promises to get tough on China.

Last January, China promised big increases in its imports from the United States as part of an agreement aimed at ending a protracted and increasingly bruising economic war. But actual purchases have lagged.

The agreement left in place most of Mr. Trump’s new tariffs, mainly at 25 percent. Yet those tariffs do not seem to deter many Americans from buying Chinese products, in part because the tariffs are collected only on the wholesale value of products when they reach America’s shores.

Hongyuan says it has not yet encountered any new competition from home sauna manufacturers based elsewhere despite facing 25 percent American tariffs for the past two years. Hongyuan also has access to dozens of suppliers within an hour’s drive that compete vigorously to produce inexpensive glass doors and hinges at the lowest cost.

So Hongyuan can afford to import lumber across the Pacific from Canada, saw the wood and polish it and assemble it into home saunas, and then ship the saunas in kits back across the Pacific all for less than it costs to make saunas in the United States. Considerable hand labor is still involved, although Chinese-made automatic saws now take the lumber in one end and put out boards of various shapes and dimensions.

“Even with the 25 percent tariff, the manufacturers in China still have lower costs,” said Rachel Wang, the company’s export manager.

Such a cost advantage has helped drive China’s share of world exports to nearly 20 percent in the April-to-June quarter this year, up from 12.8 percent in 2018 and 13.1 percent last year, said Rajiv Biswas, the chief Asia economist at IHS Markit, a global data and consulting firm.

Part of that increase is temporary. Some factories elsewhere closed temporarily during the spring because of coronavirus lockdowns or supply chain disruptions linked to the pandemic. China’s own share of global exports dipped somewhat in the January-to-March quarter, to 11 percent, as it was battling the virus.

But China now appears strong in exports across many sectors, even as the cost of its imports is likely to stay low for months to come. China’s trade surplus — when the value of its exports exceeds that of its imports — has ballooned this summer, especially in July.

China’s exports have been helped by the country’s currency, which has remained mysteriously weak even as the economy has emerged from the pandemic with growth stronger than in practically any other nation.


Credit…Andrea Verdelli for The New York Times

Credit…Andrea Verdelli for The New York Times

Credit…Andrea Verdelli for The New York Times

China’s currency, the renminbi, has strengthened only slightly against the dollar in recent months. It has also weakened 6 percent against the euro since the start of May, even though Europe faces a severe recession.

Foreign economists suspect the Chinese government has used its tight control of the country’s financial system to keep the renminbi weak. Brad Setser, an economist at the Council on Foreign Relations in New York, said the most likely explanation for the currency’s performance this summer was that state-owned or state-controlled Chinese banks and other financial institutions were shifting some of their immense assets, selling vast sums of renminbi and buying dollars or euros to prop up those currencies.

The People’s Bank of China has said, including in a statement last week, that it is not manipulating the renminbi, but has also said it is committed to maintaining a mostly stable value for the currency.


Credit…Andrea Verdelli for The New York Times

Credit…Andrea Verdelli for The New York Times

Credit…Andrea Verdelli for The New York Times

China’s advantages go beyond a weak currency, however. China has built a 700-city bullet train network in a decade. It also has an abundance of labor, a culture of long working hours and tightly restricted unions. Manufacturers are not as encumbered by environmental laws against pollution as in many other countries.

Robert Gwynne, a shoe manufacturing and exports specialist in Guangdong, said reviving competitiveness in the United States and elsewhere to compete with China would not be quick or easy.

“To get it back,” he said, “you’re looking at 20 to 30 years, depending on what business you’re in.”

To be sure, China’s dominance of global manufacturing could be hurt by geopolitical shifts, such as if other countries demand that companies move part of their supply chains elsewhere. The United States and Japan have begun to do so. European governments like France’s have started to move in the same direction, particularly for medical supplies. Large companies with the capacity to set up entirely new supply chains elsewhere, like Foxconn of Taiwan and Apple, are exploring alternatives.

But the pandemic, which has grounded many flights and slowed logistics, has shielded China at least temporarily from attempts to move factories to other countries. Many multinationals have cut back on investment as global demand has slowed, and so have little money to set up new operations elsewhere.

“In the middle of a global recession, companies are not going to divest unless trade barriers force them,” said Joerg Wuttke, the president of the European Chamber of Commerce in China. “Companies would rather close facilities than open up new ones.”

Coral Yang contributed research.

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For American Wine Producers, Fear, Uncertainty and Hope

Lioco Wine Company is in survival mode.Under ordinary circumstances, this small California wine producer buys grapes from vineyards in Sonoma County, Mendocino County and the Santa Cruz Mountains to make expressive, nuanced wines.It sells them to restaurants, to distributors around the country and directly from its tasting room …

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White House Weighs Tariff Delay

WASHINGTON — The Trump administration is considering postponing tariff payments on some imported goods for 90 days, according to people familiar with the matter, as it looks to ease the burden on businesses hurt by the pandemic.Some businesses and trade groups have argued that the levies President Trump imposed on foreign …

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As Trump Visits India, a Trade Deal Remains Elusive

WASHINGTON — President Trump’s visit to India includes a state dinner, tens of thousands of cheering onlookers and even a marching band on camels — but a long-awaited trade deal between the United States and India is notably absent.

For the second time since September, when Prime Minister Narendra Modi of India visited the United States, the two countries have failed to reach even a limited “mini-deal” that would increase trade for focused groups of goods, like dairy products, medical devices and Harley-Davidson motorcycles.

Negotiators from both countries have been working since 2018 on a deal that would lower Indian barriers to some American products, and restore India’s access to a program that allows goods to enter the United States tariff-free.

But the breakdown in negotiations illustrates the steep challenge in reaching a trade deal between two countries headed by populist leaders who harbor suspicions of multilateral arrangements. Both Mr. Trump and Mr. Modi want to protect jobs in their own countries by fending off foreign competitors — shared attributes that make it even more difficult to strike a comprehensive agreement that would roll back trade barriers more broadly.

“Both sides are attuned to their own political imperatives and not where the other side might have an area of accommodation,” said Nisha Biswal, president of the U.S. India Business Council, who served as assistant secretary of state for Central and South Asia during the Obama administration. “It is hard, then, to find where the common ground is where a deal could be struck.”

In appearances alongside Mr. Modi on Tuesday, Mr. Trump touted an agreement by India to purchase more than $3 billion of American military equipment, as well as other purchasing agreements related to commercial airlines and natural gas.

He said the two sides had made “tremendous progress on a comprehensive trade agreement” and that he remained optimistic they could reach a deal.

But urgency toward a deal appears to have faded, with both leaders appearing content for trade barriers to continue. Mr. Trump has said he is focused on a larger agreement that could be reached at the end of this year, if the two sides can find common ground.

That may not be easy. During his visit, the president reiterated his previous complaints about India’s high tariffs on American products, including Harley Davidson motorcycles and other goods.

“We’re being charged large amounts of tariffs, and you can’t do that,” Mr. Trump said. “I just said that’s unfair, and we’re working it out.”

He added that “the money you’re talking about is major, but the United States has to be treated fairly. And India understands that.”

Since trade talks began, both the United States and India have escalated tensions by ratcheting up tariffs and trade barriers, rather than lowering them.

In March 2018, Mr. Trump included India in the list of countries that would be hit by his steel and aluminum tariffs. India responded with retaliatory tariffs on American almonds, apples and other goods. Last May, the Trump administration stripped India of a special status that exempted billions of dollars of its exports into the United States from tariffs.

The two sides were close to reaching a modest agreement in early January that would remove barriers for American farmers and medical device makers and strengthen India’s intellectual property protections, among other issues. But new demands — like a U.S. request for India to buy more walnuts and turkeys — kept popping up, delaying an agreement.

India then surprised the Trump administration in February by pledging to raise import duties on more than 100 items, including medical devices, furniture, electronics, cheese and shelled walnuts — a move that became a major stumbling block to the pact’s conclusion.

Mr. Trump’s trade negotiator, Robert Lighthizer, responded by reopening previously settled issues. Then he canceled a planned trip to work out everything in person with Mr. Modi’s commerce minister, Piyush Goyal.

An Indian official briefed on the talks said that India would not be bullied into making an agreement with the United States, especially if those concessions might ultimately hurt Indian interests.

For both India and the United States, the trading relationship is an important one. India was the United States’ ninth-largest trading partner in goods in 2018, while the United States edged ahead of China to become India’s largest trading partner last year.

Edward Alden, a senior fellow at the Council on Foreign Relations, said the outcome showed the limitations of Mr. Trump’s truculent approach to trade, in which he tries to ratchet up pressure on trading partners to force them into making a bilateral deal.

With smaller countries that count the United States as a major market — South Korea, Japan, Canada and Mexico — Mr. Trump has signed a series of small or revised deals. But with bigger economies, Mr. Trump’s one-on-one approach “has really run into roadblocks,” Mr. Alden said.

With China, it resulted in a limited trade deal, but not one that addressed the biggest economic issues between the countries. Negotiations with the European Union have so far failed to progress. And with India, Mr. Trump’s pressure campaign may have backfired, he said.

Alyssa Ayres, also a senior fellow at the Council on Foreign Relations, said India had gradually been moving toward greater economic openness since experiencing a financial crisis in 1991. But in recent years, the Trump administration’s trade tactics may have pushed India in the opposite direction.

“Given that the Trump administration has brought tariffs back as a policy tool, we are setting the wrong example ourselves for these trade moves,” she said.

But Wendy Cutler, vice president of the Asia Society and a former trade negotiator, said the United States was hardly alone in its inability to get India to sign a trade deal.

India has yet to sign a deal with Europe despite years of talks and has fought efforts by the World Trade Organization to update its trade rules, Ms. Cutler said. Progress that the United States and India were making toward a deal “was overshadowed by new tariff and nontariff measures that India was erecting, seriously complicating the talks.”

The Trump administration’s biggest carrot is the restoration of India’s tariff-free status for industries under the Generalized System of Preferences. But that carrot, which waived $200 million a year in tariffs on Indian exports, hardly has the Indian side salivating.

Since Mr. Trump revoked that status, India’s exports of preferential goods like leather handbags, certain metal and plastic products and furniture have increased 5.5 percent, compared with a 1.9 percent increase in overall exports to the United States. That suggests Indian companies are facing little pain from the change in trade status.

“The U.S. needs the trade deal more than India does,” said Mukesh Aghi, the chief executive of the U.S.-India Strategic Partnership Forum, a business group whose members include PepsiCo, Cisco, Mastercard, Boeing and Disney.

The battle over milk and vegetarian cows has been another example of how the two sides can’t seem to find a middle ground.

India produces more milk than anyone else in the world, yet it’s still not enough to meet demand. But India is worried that cheap imported milk from the United States will wipe out many of its 80 million small farmers, who typically tend just a few cows each.

“If our farmers go out of business, there is no one to feed us,” said Ashwani Mahajan, a leader of Swadeshi Jagran Manch, a business group affiliated with India’s ruling Bharatiya Janata Party.

Then there’s the matter of what those cows eat. In the United States, cattle are typically fed ground-up parts of other animals. That does not pass muster with Hindus, most of whom are vegetarian.

Some American farmers are willing to keep cows on a purely vegetarian diet for 90 days before their milk is sent to India, said Tom Vilsack, the chief executive of the U.S. Dairy Export Council and the U.S. agriculture secretary under President Obama.

However, “the Indian government is not willing to accept that,” Mr. Vilsack said. “I don’t see any path forward.”

Ana Swanson reported from Washington, and Vindu Goel from Mumbai, India.


NYT > Business

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Trump Administration Will Raise Tariffs on European Aircraft

WASHINGTON — The Trump administration said it would raise tariffs on European aircraft in an effort to pressure Europe in a long-running trade dispute over airplane subsidies.

The United States Trade Representative said late Friday that it would increase the duty it had imposed on European aircraft to 15 percent from 10 percent, effective March 18. It also removed prune juice for the list of taxed items, and added a 25 percent tax on French and German butcher and kitchen knives.

The annual value of the goods subject to tariffs would remain at $7.5 billion, as before, the trade representative said.

The tariffs are part of a 15-year-old complaint over subsidies European governments gave plane maker Airbus, which put its American competitor, Boeing, at a disadvantage. In October, the World Trade Organization granted the United States permission to try to recoup its losses by taxing as much as $7.5 billion of European exports annually. Those tariffs are expected to continue until Europe removes its subsidies or the two governments come to a negotiated resolution.

The airplane dispute is just one irritant in an increasingly fraught trading relationship with Europe.

The United States and the European Union remain at odds over France’s plan to tax American technology companies. European officials have also been angry that the United States has effectively paralyzed the W.T.O. by refusing to sign off on new appointees to a crucial appeals panel.

Despite those disputes, the two governments have continued to negotiate to improve trade terms. After announcing plans for a comprehensive trade deal in 2018, both sides appear to have scaled back their ambitions, with officials saying they might settle on a “mini-deal” that would focus on a few sectors.

In a news conference with President Trump in Davos, Switzerland, in January, the European Commission president, Ursula von der Leyen, said she was expecting to reach a trade agreement that she could sign with the United States “in a few weeks.” But details on such an agreement have since been scarce, with few visible high-level meetings.

The tariff changes could put more pressure on Europe to reach a deal. Under U.S. law, the United States Trade Representative is required to periodically revisit and revise tariffs put in place as part of a W.T.O. dispute, to put more pressure on negotiating partners to reach a resolution.

The tariffs that the United States imposed on Europe in October included a 10 percent tax on aircraft from Britain, France, Germany and Spain, and a 25 percent tax on wine, cheese, pork, whiskey, olives and other agricultural products.

Although these levies are permitted under the rules of the W.T.O., they have still raised an outcry from consumers and industries in the United States.

“The Trump administration’s threat of a tariff ‘carousel’ — shifting even one new product onto a list hit with new import taxes — generates even more of the uncertainty that haunts American business and workers,” said Chad Bown, a senior fellow at the Peterson Institute. “Even though there were few changes today, little was resolved, and the administration has made sure that much of that uncertainty will remain.”

Some industries that had been hoping for relief were disappointed when the administration announced their changes to the tariffs Friday night.

Harry Root, founder of the U.S.-Wine Trade Alliance, a group that represents wine distributors and other professions in the United States, said wine tariffs had done disproportionate damage to American businesses and consumers — and that European winemakers had responded by shipping more products to China instead.

Mr. Root said that the administration had heard the industry’s message “loud and clear,” that wine tariffs were inefficient. But when the trade representative published its list Friday night, the 25 percent tariff on European wine remained in place.

American and European negotiators have met to discuss the possibility of a resolution — potentially in the context of negotiations toward a broader trade deal — but so far have failed to reach an agreement.

Airbus’s chief executive, Guillaume Faury, said that regardless of the Trump administration’s tariff adjustments on Friday, the bigger issue for the company was whether Europe and the United States could strike a settlement this summer.

The W.T.O. is expected to rule as early as May on a parallel case, in which Europe has claimed that the United States provides its own unfair subsidies to Boeing. The W.T.O. is expected to give the European Union the go-ahead to apply counter tariffs on American imports to Europe.

Mr. Faury acknowledged that U.S. penalties on products like cognac, wine and other agricultural goods and industrial products hurt small producers. A 10 percent tax applies to European aircraft, though Mr. Faury added Airbus had managed to keep costs “manageable” for U.S. customers.

“It’s a lose-lose situation,” Mr. Faury said. “We think 2020 is the year to put this behind us and move forward as an industry with no tariffs and good competition.”

As tensions have heated up with Europe, the Trump administration has calmed its trade disputes on other fronts.

The Trump administration’s initial trade deal with China went into effect on Friday, with tariffs on more than $110 billion of Chinese goods dropping from 15 percent to 7.5 percent. Tariffs on roughly $250 billion worth of Chinese goods will remain at the 25 percent rate.

Liz Alderman contributed reporting from Paris.


NYT > Business > Economy

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China Cuts Tariffs on $75 Billion in U.S. Goods. That Was the Easy Part.

HONG KONG — China on Thursday said it would reduce tariffs on $75 billion worth of American-made goods, a step that signals its intention to hold up its end of a trade truce with President Trump despite the coronavirus crisis unfolding largely within its borders.

That truce most likely will not last long, however, if China does not carry through with the part of the deal Mr. Trump prizes most: a promise to buy about $200 billion in goods from the United States over the next two years.

The move announced on Thursday was widely expected as both sides back down from an increasingly punishing trade war. In January the two governments reached an interim trade pact intended to forestall more tariff increases. The deal represented a freeze on the trade war rather than an end, and the countries have pledged to continue talks.

The United States agreed to reduce tariffs on $120 billion worth of Chinese-made goods as part of that deal, and on Thursday, China reciprocated. China’s Ministry of Finance said that it would essentially halve tariffs it placed in September on American cars, crude oil, soybeans and other goods. The tariff cuts would go into effect on Feb. 14.

Chinese officials on Thursday said that they still hope to eventually eliminate tariffs enacted by both sides. The trade truce left in place most of the new and increased tariffs on $360 billion in Chinese-made goods that Mr. Trump began enacting in 2018, setting off the trade war between the two economic heavyweights.

The Coronavirus Outbreak

  • What do you need to know? Start here.

    Updated Feb. 5, 2020

    • Where has the virus spread?
      You can track its movement with this map.
    • How is the United States being affected?
      There have been at least a dozen cases. American citizens and permanent residents who fly to the United States from China are now subject to a two-week quarantine.
    • What if I’m traveling?
      Several countries, including the United States, have discouraged travel to China, and several airlines have canceled flights. Many travelers have been left in limbo while looking to change or cancel bookings.
    • How do I keep myself and others safe?
      Washing your hands is the most important thing you can do.