- The US has proposed tariffs on dozens of European goods like cheese, wine, and olive oil.
- If implemented, these tariffs could force prices on these products to skyrocket.
- Industry insiders estimate that the tariffs could affect close to 100,000 jobs in the cheese and wine worlds alone.
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There might be some sad news in the near future for cheese and wine lovers – not to mention close to 100,000 workers in those industries.
The US has proposed retaliatory tariffs on dozens of European products in response to the European Union’s subsidies to Airbus, Boeing’s European rival. The World Trade Organisation ruled the transactions illegal in May 2018.
Both the US and the EU are waiting on a WTO decision regarding the tariffs. But while aeroplane manufacturers are on the front lines of this trade war, the food industry is being caught in the crossfire.
A preliminary list of European products that could be taxed includes cheese, olive oil, and wine. Additional products were published in another list in July. Duties on these items could reach up to 100%.
The effects could be devastating to companies and consumers alike, industry insiders say.
The price of certain cheeses could more than double
“I would have to basically lose half my employees,” said Philip Marfuggi, the president and CEO of the Ambriola Company, which almost exclusively imports cheeses from Italy and sells them in American grocery stores.
He estimates that with a 100% duty on European cheese, the prices of most specialty cheeses would practically double at retail, both at specialty stores and in stores like Walmart, Whole Foods, and Kroger.
“If there was 100% duty on all the product coming in, my sales would virtually stop,” Marfuggi said.
Higher prices would likely mean less cheese selling in stores, which could translate to fewer imports and fewer jobs available for workers across the supply chain, from packaging to trucking.
Marfuggi estimates that 20,000 jobs in the cheese industry could be affected by the tariffs.
At the consumer level, the result would be scant options for specialty cheese – and skyrocketing prices.
Marfuggi used the case of Parmigiano-Reggiano, which usually sells for $US15 to $US22 a pound, as an example.
“I mean, who’s going to pay $US45 a pound for Parmigiano-Reggiano?” said Marfuggi, who also serves as president of the Cheese Importers Association of America, an organisation that informs and advocates on issues related to the dairy trade.
For Marfuggi and others who rely on imported cheese for business, tariffs could be devastating.
“It sort of paralyzes us,” said Thomas Gellert, president of cheese and specialty food import company Atalanta Corporation.
Until a decision on the tariffs is reached, industry executives like Gellert are unsure about how much to invest in a business that could be thrown into chaos.
Only 5% of olive oil consumed in the US is domestically made
Olive oil is also on the list of goods that would be subject to tariffs.
If tariffs on olive oil increase, a reliance on an American supply wouldn’t just be inconvenient -according to industry insiders, it would be nearly impossible.
“You can’t flick a switch and make the trees work overtime and make more olives,” said Joseph R. Profaci, executive director of the North American Olive Oil Association. He estimates that just 5% of olive oil consumed in the US is homegrown. Most of it comes from Europe.
Olive oil is a staple in homes, supermarkets, and restaurants. Profaci joked that with an olive oil shortage likely, “Canola Garden” might be a more appropriate name for the popular Italian-style American restaurant chain.
Lawmakers recently sent a letter to the US Trade Representative’s Office to petition that olive oil be removed from the list of tariffs.
“Without European imports of olive oil, the United States cannot meet current consumer demand,” the letter reads. 14 Democratic and five Republican members of the US House of Representatives signed the letter.
USTR did not immediately respond to a request for comment.
Gianfranco Sorrentino owns three Italian restaurants in New York City, all of which import wine and cheeses almost exclusively from Italy. Sorrentino says that 100% duties would force him to hike up prices and potentially lead to retaliation from the EU.
“Nobody is going to win from that,” he said.
Representatives from the US wine and spirits industry estimate that 78,000 jobs in their industry could be affected by the tariffs.
The WTO has yet to make a decision. In the meantime, specialty food workers and connoisseurs alike can only pray that their products don’t get caught in the battle that started in the aviation industry.
Industry executives like Marfuggi say that the proposed retaliatory tariffs, while meant for Europe, would miss the intended target by a longshot.
“It’s the American consumer and the American worker that are going to be hurt,” he said.
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