Trade war escalates: EU counter-tariffs to hit certain US food products from tomorrow

21 Jun 2018 --- The EU is hitting back at US steel and aluminum duties with its own list of retaliatory tariffs due to come into force on Friday (June 22). The move will see charges on a range of products including bourbon, cranberries and peanut butter. Referred to as “rebalancing measures,” the EU has adopted a regulation that puts in place the tariffs targeting a list of products worth €2.8 billion (US$3.2 billion).

The move shows how the so-called trade war is escalating as European Trade Commissioner Cecilia Malmström says President Trump’s tariffs has left the Union with no alternative option. 

"We did not want to be in this position. However, the unilateral and unjustified decision of the US to impose steel and aluminum tariffs on the EU means that we are left with no other choice,” she says.

“The rules of international trade, which we have developed over the years hand in hand with our American partners, cannot be violated without a reaction from our side. Our response is measured, proportionate and fully in line with WTO rules. Needless to say, if the US removes its tariffs, our measures will also be removed."

FoodIngredientsFirst has spoken to some US sectors concerned over the impact of the trade dispute. 

“The US cranberry industry strongly supports free trade. We have spent decades developing the European Union market for cranberries and currently sell more than one hundred million pounds to the EU annually,” Terry Humfeld, Executive Director of the US Cranberry Institute tells FoodIngredientsFirst. 

“Tariffs on US cranberries will be very detrimental to our industry. We hope that the parties involved can resolve this dispute so that we can continue our important role in providing cranberry products to millions of consumers in the European Union.”

Meanwhile, the Grocery Manufacturers Association says that it “will be evaluating the potential impact of the EU tariffs on our members.”

President of the American Peanut Council, Patrick Archer also tells FoodIngredientsFirst that the sector is waiting for the “retaliatory tariffs” to come into effect. 

“We continue to be disappointed that trade negotiators were unable to work out an amicable solution to this issue, but are hopeful that a resolution can be found soon,” he says.

“In the meantime, we’ll continue to promote the high quality and health benefits of US.peanut butter to our European customers.”

Will Trump back down?
Brussels had previously drawn up a comprehensive list of US products that would be targeted for retaliation unless the Trump administration backs down and exempts the allied member states from the tariffs on steel and aluminum imports. 

Included on the list are various sweetcorn categories, including frozen, kidney beans, maize (except seeds for sowing), some categories of semi-milled rice, peanut butter, cranberries and orange juice as well as bourbon whiskey in certain measurements and containers, plus many more. 

Many of the products included on the 10-page EU list have been carefully selected for maximum impact. For instance, Florida is considered a “swing state” in US elections and the fact that orange juice, a major export from the state, is included on the list is unlikely to be a coincidence. 

The EU says that the list of US imports that will now face an extra duty at the EU border includes steel and aluminum products, agricultural goods and a combination of various other products. By putting these duties in place, the EU is exercising its rights under the World Trade Organization (WTO) rules.

This move from the EU follows the notification of the full list to the WTO and its endorsement by the College of Commissioners on June 6, following the US application of the full tariffs on EU steel and aluminum products. 

The EU Member States have expressed their unanimous support for this approach.

Rebalancing bilateral trade 
The EU aims to rebalance bilateral trade with the US taking as a basis the value of its steel and aluminum exports affected by the US measures. Those are worth €6.4 billion (US$7.3 billion).

Of this amount, the EU will rebalance on €2.8 billion (US$3.2 billion) worth of exports immediately. The remaining rebalancing on trade valued at €3.6 billion (US$4.1 billion) will take place at a later stage – in three years' time or after a positive finding in WTO dispute settlement if that should come sooner.

The EU tariffs will be effective for as long as the US measures are in place, in line with the WTO Safeguards Agreement and EU legislation.

The Implementing Regulation sets out the products and level of duties to be applied, both now and in the future, if necessary. The list of products is the same as in the previous Implementing Regulation of May 16 and as notified to the WTO on 18 May.

This all began in March when President Trump first said planned tariffs on foreign steel and aluminum were to be imposed, claiming this needed to happen on national security grounds and arguing that global oversupply has been driven by China and threatens US steel and aluminum producers. 

Canada also plans “trade-restrictive countermeasures” which could affect US$12.8 billion of US goods while Mexico recently put billions of dollars worth of tariffs on American products ranging from pork and bourbon to steel.

By Gaynor Selby