27th August, 2019 by Roger Morris
Americans could soon be having to pay more for European wine, spirits and cheese if proposed tariffs by the US Trade Representative’s office (USTR) come into play.
Later this month the World Trade Organisation (WTO) is expected to levy a penalty representing billions of dollars against EU countries for having unfairly subsidised Airbus production and sales at the expense of its US competitor, Boeing.
For American fans of Italian restaurants, it may mean that they will find fewer Italian cheeses on their trolley. Or they’ll have to pay more for them.
What does Airbus have to do with the price of Parmigiano Reggiano? This is what companies that import European cheeses, wines and whiskies, repeatedly asked during hearings held on 5 August by the USTR, which will decide which EU products will be slapped with tariffs to recoup an expected $4 billion WTO finding.
So far, cheeses, olive oils and Scotch whisky are on the USTR’s short list. None relate to the aircraft industry, but the USTR isn’t limited in what EU industries can be penalised. There is more than one tariff skirmish being fought between America and the EU.
Leading up to last weekend’s G7 summit of world leaders in France, a war of words erupted between Donald Trump and EU president Donald Tusk over the French threat of slapping a digital tax on US-based technology companies.
“If they do that, we’ll be taxing their wine like they’ve never seen before,” Trump said as he boarded his helicopter en route to Biarritz.
Tusk shot back with a threat of his own: “I will protect French wine with genuine determination. If the US imposes tariffs, the European Union will respond in kind.”
Importers in America have seen the storm coming. One prominent wine and spirits importer, who asked for anonymity, said in his annual business preview, “It’s very difficult to plan for 2019 when you have to check Twitter every morning for changes in US policy.”
French producers were no less optimistic about the future. “As it relates to comments made by the Trump administration, it’s difficult, if not impossible, to distinguish between those used as a negotiation tactic versus those tied to substantive economic policies,” said François Labet, president the Bourgogne Wine Board (BIVB). “We are therefore obliged to take comments regarding tariffs as potentially real.”
Members of the Scotch Whiskey Association for the first time in 20 years now face tariffs from the country that represents it largest export market in value and second in volume sales.
Cheese importers, while still hoping for a reprieve from the pending WTO announcement and the USTR decision, see disaster instead.
“We are already paying US$134 million in tariffs versus a potential $1 billion in tariffs,” said Phil Marfuggi, head of the Cheese Importers Association of America (CIAA). He predicts any new tariffs will be counter-productive and will lose money for the US government, as less tariff-qualified cheese will be imported and sold in America as a result.
In preparation, Marfuggi, who is also CEO of Ambriola cheese importers, has been stockpiling Parmesan. “Since May, I have been doubling the amount of my monthly orders of Italian hard cheese, which has a 12-15 month shelf life,” he told db.
New York restaurateur Gianfranco Sorrentino has been doing the same. “I have been filling up my basement, my kitchen, anyplace where I can find space with Italian cheeses and Italian wines,” he said. “While there are some great cheeses made in the US, they aren’t Italian cheeses.”