Many U.S. food companies that export products to Europe have been hit with a new round of tariffs this week as part of an ongoing dispute over government subsidies to airplane manufacturers.
As previously reported, the World Trade Organization had approved European Union tariffs on U.S. goods worth nearly $4 billion in annual sales as retaliation for tax breaks given to Chicago-based Boeing. The U.S. had previously imposed tariffs on $7.5 billion worth of EU products in retaliation for government subsidies given to Airbus, the European plane maker.
The latest round includes a 25 percent levy on a range of specific food items from the U.S., including wines and spirits, chocolate, cheese, seafood, ketchup, fruits, nuts, soups, and several agricultural products, along with merchandise and equipment such as tractors. The tariffs increase costs for European retailers and consumers, theoretically giving a boost to suppliers of similar items from Europe or other regions.
"The Specialty Food Association has been encouraging the U.S. Trade Representative to eliminate tariffs on European food products as a result of a dispute between large aircraft suppliers," says Ron Tanner, vice president of education, content & advocacy, for the SFA. "We are concerned that the EU has also chosen food as a tariff weapon. Both sides should look at tariffs on aircraft, aircraft parts, and other heavy industry and not on food makers, farmers, and fishermen."
The tariffs target specific foods, including both Atlantic and Pacific salmon, scallops, sweet potatoes, dates, grapefruit, and certain nuts and cheeses, while avoiding others, including several other types of seafood. Earlier this year, a preliminary list of potential targets for the tariffs covered a much broader range of products, including lobster.
The National Fisheries Institute said the tariffs on salmon and scallops, which together had about $20 million in sales to the EU last year, was “disappointing,” coming at a time when the industry is seeking to regain its footing amid the sharp declines in restaurant sales.
“The seafood communities in the U.S. and EU have long enjoyed a trade relationship that has created tens of thousands of jobs and, most recently, been poised to expand,” said John Connelly, president of NFI. "It makes no sense that a World Trade Organization dispute about planes that fly 40,000 feet above where fish swim should include seafood. Now, given missteps by both sides, American workers and families will suffer.”
In the spirits category, the tariffs target rum, brandy, vodka, and vermouth. The levies also come at a particularly difficult time for the alcoholic beverage industry on both sides of the Atlantic, which had already been suffering from the impact of previous tariffs related to other disputes, in addition to the severe downturn of the industry due to bar and restaurant closures caused by the pandemic.
“The application of excessive and unwarranted tariffs has to end,” said the Distilled Spirits Council of the U.S., in a statement issued by a coalition of 20 affiliated industry groups from the U.S. The United Kingdom and the EU. “Hospitality businesses and our consumers, as well as producers, wholesalers and importers of distilled spirits, wine, and beer are being slammed from both sides of the Atlantic in an aircraft dispute wholly unrelated to the drinks business. This is on top of the closings of restaurants, bars, and distillery and winery tasting rooms because of the COVID-19 pandemic.”
The coalition called on trade negotiators to return to the bargaining table and immediately suspend the current tariffs.
Cheddar cheese was also singled out for tariffs, which may relate to an ongoing dispute over the use of the word “cheddar,” according to reports. Europe actually imports very little cheese from the U.S., having a robust cheese industry of its own. But the word “cheddar” is part of the geographic indicator (GI) term “West Country Farmhouse Cheddar,” which refers to the cheddar cheese produced in a specific region of England, and sold to other markets.
The dispute is among several battles over cheese names that at one time indicated specific geographic origins, including feta, gorgonzola, gruyere, asiago, and parmesan.
Meanwhile, the EU said it was ready to discuss a unilateral end to the tariffs spurred by the dispute over Boeing and Airbus.
“We call on the U.S. to agree that both sides drop existing counter-measures with immediate effect so that we can quickly put this issue behind us,” said Valdis Dombrovskis, EU Commission executive vice president, in a statement.
U.S. Trade Representative Robert Lighthizer said the U.S. was “disappointed” in the EU’s tariff action.
“The alleged subsidy to Boeing was repealed seven months ago,” he said in a statement. “The EU has long proclaimed its commitment to following WTO rules, but today’s announcement shows they do so only when convenient to them.”
Related: EU to Impose Retaliatory Tariffs; EU: USTR Has No Basis to Impose Tariffs.
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