News | Published October 19 2019

Fears over US tariffs on EU-made goods

Many products originating from the EU will now be more expensive for buyers in the US after Washington DC imposed tariffs equalling £6.1 billion just after midnight EST on October 17.

The tariffs come after the US had been embroiled in a 15-year legal battle with the EU, on the grounds that aircraft subsidies paid out by the bloc to Airbus were illegal.

The World Trade Organisation ruled in favour of the US earlier in October and the tariffs have now come into force in response, to the chagrin of suppliers and buyers on both sides of the Atlantic.

A lengthy list of goods originating from Europe has now been hit by tariffs of 25 per cent, ranging from food and drink to luxury items.

The list accounts for a small amount of overall EU imports, which totalled £531 billion in value last year, but suppliers and buyers are concerned about the impact the tariffs will have.

The EU has already responded, saying that it will have no alternative but to tariff US goods due to Airbus rival Boeing receiving tax breaks from the US government.

The bloc had already brought in a number of tariffs on US-made products in 2018, after Washington DC decided to impose duty on steel and aluminium from the EU.

The new US tariffs will apply to a number of European cheeses, including British Stilton, which is proving a real concern for US buyers since European cheeses have become more popular in the US. 

Indeed, some US-based cheese sellers have already been stockpiling ahead of the tariffs coming into force to protect consumers from higher costs in the short term.

In a blow to European wine producers, the tariffs will apply to any wines produced in France, Germany, Spain and the UK, with Italy exempt. In 2017, the US purchased 32 per cent of all EU wine exports to non-EU nations.

US president Donald Trump had long criticised the existing trade arrangement on French wine, telling US media the existing rules were “not fair” and vowing to “do something about it” back in June.

Trump said at the time: “France charges us a lot for the wine. And yet we charge them very little for French wine.

"And you know what? It's not fair. We'll do something about it.”

The olive oil industry will also feel the hit from US tariffs, with the single largest producer Spain, affected. Italy and Greece, the second and third largest producers respectively, will be exempt.

Although Italy has been exempt from tariffs on its wine and olive oil products, other alcoholic products such as Limoncello, Fernet and Amaretto have not escaped unscathed.

The tariffs will also apply to Scotch whisky, a real setback for the Scottish Whisky Association with $1.3 billion worth of its product exported stateside in 2018.

Its chief executive Karen Betts even went as far to say that jobs could be at risk at Scottish distilleries when the real impact of the tariffs hits.

Betts said: “In time, consumer choice will diminish and Scotch whisky companies will start to lose market share.

"In Scotland and throughout our UK supply chain, we expect to see a dropping-off in investment and productivity."

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Authored by

Scott Challinor
Business Editor
October 19 2019

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