Colangelo & Partners On The Tariff Threat Looming Against European Union Agricultural Products

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Tariffs Would Be In Retaliation For Illegal Airbus Subsidies

“Tariffs are bad for business. The proposed tariffs on EU agricultural products are bad for American workers, bad for American businesses and bad for American consumers − in addition to being potentially devastating for European producers,” said Gino Colangelo, President of Colangelo & Partners.

There is a looming threat of US tariffs on European Union agricultural products (wine, cheese, olive oil and more) that is flying under the radar for many – Americans and Europeans alike -- because of the American mass media’s focus on the US trade war with China. The proposed tariffs would be in response to a longstanding dispute over European Union subsidies to Airbus that put Boeing at a competitive disadvantage. The World Trade Organization (WTO) has already ruled in favor of the United States in the dispute. The WTO is expected to announce a ruling on the amount of the penalty in the coming weeks. Estimates range from five to fifteen billion dollars.

Once the ruling is announced, the United States Trade Representative (USTR) office is expected to set the rates for the products that will be taxed. The tariffs are then expected to be imposed immediately. The same product categories from different EU countries may be taxed at different rates (i.e. wine from Italy may be taxed at a different rate than wine from France). It’s possible that countries that benefitted from the subsidies to Airbus would be penalized more than countries that did not. The four countries in the Airbus Consortium are France, Germany, Spain and the United Kingdom.

“Tariffs are bad for business. The proposed tariffs on EU agricultural products are bad for American workers, bad for American businesses and bad for American consumers − in addition to being potentially devastating for European producers,” said Gino Colangelo, President of Colangelo & Partners. "The proposed tariffs would lead to job loss (estimates are running 100,000+), increased prices and limited choice.” Job losses would occur throughout the distribution chain: from dock workers and truckers to deli counter employees, restaurant kitchen workers and specialty food, wine and spirits salespeople.

The effect of tariffs to offset the Airbus/Boeing dispute are potentially devastating for European agricultural producers as well as US businesses that import, distribute and sell imported European agricultural products. To hedge against the effects of the tariffs, American importers are loading in extra inventory before the expected tariffs take effect, lobbying their government representatives against tariffs, and exploring alternate supply chains.

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Victoria Cooper
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