What a 25% EU Food Tariff Could Mean

The Lempert Report
November 15, 2019

A decade plus dispute nobody was talking about.

Surprisingly, no one was reporting on a dispute between the United States and the European Union for the past 10+ years that, according to the Federal Register (Volume 84, No. 71) certain member States have breached their World Trade Organization (WTO) obligations by providing subsidies on the manufacture of large civil aircraft and by failing to withdraw the subsidies or remove their adverse effect. It is basically a fight between U.S. aircraft manufacturers including Boeing and Airbus, whose main civil airplane business is based in France with production and manufacturing facilities in France, Germany, Spain, the UK, China and the US.

Starting Oct. 18 the Trump administration placed 25% import tariffs on $7.5 billion worth of foods and beverages from the European Union.

The list of over 400 products includes foods like cheeses, olives, coffees, fruits, pastas, pork, wines, liquors, jams, seafood and fish, olive oil and yogurt to name just a few. Staples that most of your shoppers have in their kitchens and enjoy on a regular basis.

It is the imported food supply chain that would be the most disruptive: to the factories that produce the products in the EU, the shipping companies, the importers, the distributors, the grocery retailers and restaurants and to the consumer. They will all be effected by lost revenue, lost jobs and a loss of products that simply will find its way to other consumers in other countries.

I spoke with Phil Marfuggi, CEO of The Ambriola Company, a leading importer of Italian cheeses, who serves as the President of the Cheese Importers Association of America who told me there could be up to 20,000 jobs here in the U.S. that could be affected if these tariffs are imposed. Marfuggi went on to explain that many of the imported foods are not the kind of foods that can be replaced by domestic production. Certain foods, by law, can only be produced in certain regions – like Champagne and my beloved Pecorino Romano. He also said that 90-95% of cheeses imported from the EU are on the list.

The trade relationship between the U.S. and the EU is robust. The EU is the No. 1 export market for the U.S., which last year sent $318.6 billion worth of goods to its 28 member countries — 19.1% of total exports in 2018. Last year, the U.S. imported nearly $488 billion worth of goods from the EU, accounting for 19.2% of total U.S. imports. 

The WTO should focus on fixing the inequities in the aerospace dispute and not punish other industries that are totally unrelated.