Peanut butter and packaging: EU further suspends retaliatory tariffs in transatlantic trade boost

22 Dec 2023 --- The EU has announced a continued suspension of its retaliatory tariffs on US peanut butter, originally imposed in response to tariffs on steel and aluminum imports by the Trump presidency. The agreement is set to help maintain the exchange of F&B and packaging materials between the two regions.

In 2018, former US President Trump imposed a 25% import tariff on steel and a 10% tariff on aluminum. In response, the EU imposed counter tariffs on 180 types of products worth over US$3 billion of US goods. Affected products besides steel and aluminum included agricultural goods like peanut butter and juices.

After Trump left office, the Biden administration embarked on an effort to settle trade disputes imposed by the former regime. Suspensions of tariffs were agreed on in 2021.

The tariff on imports of US peanut butter, which was also set at 25%, was set to be reimposed at the end of this month, on December 31.

But the EU will extend the suspension until March 31, 2025, at the earliest. This is a positive development for peanut butter and packaging producers, who can continue to benefit from cheaper produce without the fear of Chinese dumping, which has lowered environmental standards and priced out much of European industry. The American Peanut Council welcomes the suspension but says the industry’s financial losses have not yet been recouped.

Industry relief
The American Peanut Council (APC) is pleased by the decision. APC President and CEO Richard Owen says: “This is welcome news to the peanut industry and all those working in the supply chain to produce peanut butter for overseas markets.”

“But we still have a long way to go to recoup our losses of more than US$20 million due to a tariff war we didn’t begin, yet all the same, we are feeling its deep impact.”

As a result of the retaliatory tariffs, US exports of peanut butter and other prepared peanuts reportedly dropped from a high of nearly US$22 million in 2017 to US$1.4 million in 2020.

Since the 2021 suspension agreement, US peanut butter exports climbed marginally to US$2.3 million. However, US peanut butter exports to the EU again slipped in 2023, down 18% to US$1.5 million year-to-date through October 2023.

Long-term suspension
Prior to the retaliatory tariffs, APC says the EU was a promising growth market for US peanut butter as more European consumers were being introduced to the product and demand was growing, due in large part to APC’s export promotion work. The Trump administration imposed heavy tariffs on metals, which the EU retaliated against.

“Compound the past five years of lost market access with increasing input and labor costs, all while peanut prices remain relatively stable among other food price inflation, and it has turned into the perfect storm for peanut growers and peanut butter exporters to the EU,” continued Owen.

“We need to continue working until the promise of an impending tariff on peanut butter is no longer on the table.”

Metal packaging
A central reason for the Biden and Von Der Leyon administrations ending the tariff wars was to prevent the spread of “dirty” metal supplies from nations like China, where production standards fall far short of US or EU requirements.

China’s grip on metal markets is strong enough that a magnesium shortage in 2021 threatened to cause a “catastrophe” for European metal packagers.

European Aluminium, an association representing metal packagers, accused the Chinese government of intentionally dumping cheap, energy-intensive metal in the European market while the EU failed to take action.

The carbon footprint of European primary aluminum production is one of the lowest globally. There is reportedly approximately 7 kg of CO2 per kg of aluminum compared to a global average of 17 kg of CO2 and a Chinese average of 20 kg of CO2.

By Louis Gore-Langton

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