U.S. escalates trade row with the EU: imposes 25% tariffs on alcohol products, Italian cheese, etc

These new tariffs are likely to significantly impact numerous U.S. small and medium sized family businesses which import these European goods into the United States.

In a significant development that sees a further escalation of the U.S.-EU trade war, the Trump administration has slapped 25% tariffs on Italian cheese, French wine, and single-malt Scotch whisky in retaliation to the European Union’s subsidies on large aircraft.

The U.S. Trade Representative’s Office has released a list which contains hundreds of European products which will attract new tariffs, including butter, cookies, yogurt and salami. Incidentally, in many cases, the tariffs are applicable to specific EU countries, which includes Germany and the UK. German camera parts and blankets produced in the United Kingdom are now subject to U.S. tariffs.

The list includes UK-made wool clothing, cashmere items, sweaters, and pullovers, as well as olives from Spain and France; it also includes German coffee, EU-produced pork sausage and other pork products other than ham.

The new tariffs are scheduled to kick-in on October 18.

According to a statement from the U.S. Trade Representative’s Office, it would “continually re-evaluate these tariffs based on our discussions with the EU”; it expects to enter into negotiations in order to resolve the dispute.

The main target of U.S. tariffs is EU’s Airbus aircraft, which currently faces a 10% levy which could hurt U.S. airlines, including Delta, which have billions of dollars of Airbus orders waiting to be filled.

EU products that have not attracted U.S. tariffs include French, Greek, and Portuguese olive oil, chocolate, helicopters, sparkling wine, frozen fish, lobster, stemware and tiles.

Impact on U.S. Domestic Industry

According to Joseph Profaci, executive director of the North American Olive Oil Association, a significant portion of the imports initially threatened with tariffs were not on the list.

“We’re still digesting what it will mean for the industry, but the total universe of oil affected has been greatly reduced,” said Profaci.

In August 2019, specialty food importers had urged the Trump administration to skip the tariffs, saying “there are few to no domestic products” that could replace the imported items. According to their statement, U.S. tariffs would affect 14,000 U.S. specialty food retailers and over 20,000 other food retailers.

According to Ralph Hoffman, executive vice president of New Jersey-based Schuman Cheese, one of the largest importers of hard Italian cheeses, U.S. tariffs could slash his firm’s imports by 30% in the middle of the critical holiday season.

“It looks pretty bad. They hit cheese hard,” said Hoffman.

Mirroring similar sentiments, Phil Marfuggi, president and CEO of Ambriola Co Inc, a unit of Auricchio SpA, one of Italy’s largest cheese producers, stated, 25% was lower than the 100% tariff initially threatened, but it came on top of 10-15% tariffs already paid on specialty cheeses.

He went on to add, his firm faced extra costs of up to $70,000 each for a dozen containers due to arrive in U.S. ports after Oct. 18, if USTR did not grant a shipping grace period.

As per Robert Tobiassen, president of the National Association of Beverage Importers, the new tariffs on whisky, liqueurs and cordials, and wine from certain EU countries, would hit many of the United States’ 12,000 importers hard.

“These tariffs will devastate, perhaps destroy, many small and medium sized family businesses importing these products into the United States,” said Tobiassen.

The bulk of the tariffs, especially those on alcohol, were very unpopular on social media.

Categories: Creativity, Economy & Finance, Entrepreneurship, Geopolitics, HR & Organization, Regulations & Legal, Strategy

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