Fresh tariff hikes hang over European wines and cheeses
Posted February 13, 2020 8:43 a.m. EST
CNN — President Donald Trump imposed tariffs on French wine, Italian cheese, and single malt Irish whiskey last year -- and could escalate them by the end of the week.
That's worrying owners of specialty shops, restaurants and importers, some of whom have already raised prices on customers.
"We're faced with a big dilemma. How much can we raise prices without losing our customer base," said Lou Di Palo, who runs the 110-year-old Di Palo's in Manhattan with his family.
Most of what they sell, including cheeses, meats and wine, is imported from Italy -- and that's not something Di Palo intends to change to avoid the cost of the tariff.
"If we have to shift a large portion of our inventory to American-made cheeses, then we'd be just like every other supermarket. That's not what people travel to Di Palo's for," he said.
In October, the administration imposed a 25% tariff on a variety of goods worth $7.5 billion in retaliation for the subsidies Europe provided to aircraft maker Airbus.
But since then, the administration has threatened to hike the rate up to 100% because of a lack of progress in resolving the issue. A decision could come this week, when an initial review period ends.
Dozens of people testified before a US Trade Representative's Office hearing last month, protesting the European tariffs, as well as an additional set of duties Trump threatened over a French proposed tax on digital services -- which would affect large American tech companies like Facebook and Google.
Those tariffs would have hit French champagne and handbags, but Trump and French President Emmanuel Macron have since agreed to a temporary truce.
The Trump administration is targeting the iconic European goods, as well as imposing tariffs on aircraft in retaliation. Still, many of those who testified expressed frustration that wine, for example, was being taxed over an issue that had nothing to do with them.
"It can be hard for customers to understand why these retaliatory tariffs are impacting their lives," said Amanda Smeltz, the wine director at Manhattan restaurants estela and Altro Paradiso, whose owner recently sent emails to customers asking them to submit written comments to USTR. It argued that ithe tariffs would make it hard for small businesses to survive.
Smeltz fears that if a 100% tariff is imposed, certain items will disappear from the American market.
"If you ever enjoyed a beautiful whiskey from Ireland or a fine bottle of wine on your birthday -- you can kiss those things goodbye," she added.
The Trump administration is allowed to revise the tariffs every six months, changing the products included and the rate of the duty. That makes it hard for businesses to plan for the future.
"We just don't know what's going to happen and its debilitating for our business," said Tom Gellert, principal of the Gellert Global Group, which owns five US-based food importing companies, including one of the biggest importers of cheese.
The company has also paid new tariffs on cheeses from a variety of European countries as well as other products like olive oil from Spain, amounting to a total of $3 million since October 18. It has postponed making new capital investments in a cheese facility in New Jersey until there is more trade certainty.