Scotch single malt whisky, German decals, Spanish stuffed olives, British cotton bed linen. These products have one thing in common: the US plans to tax them at 25%.
Washington announced on Wednesday (2 October) that it would hit European products with punitive tariffs worth $7.5 billion after receiving the green light from the World Trade Organization (WTO), following a 15-year legal battle between aircraft manufacturers Boeing and Airbus.
The US announced it would impose tariffs that amount to 10% on aircraft and 25% on certain German and British industrial products, as well as on French, Spanish and Italian food products.
Unless an amicable agreement between the US and the EU is reached, these will apply from 18 October.
France’s Airbus in the ‘firing line’
Only airliners assembled in Toulouse (France) or Hamburg (Germany) would be impacted by the proposed US tariffs, and not subcontractors.
The value of Airbus aircraft to be delivered to North America exceeds $120 billion under the 2018 catalogue price. The number of Boeing aircraft to be delivered in Europe is approximately equivalent.
Germany’s cars spared but not machines
The automobile industry will escape this round of American sanctions.
However, some German-manufactured machinery and agri-food products (roasted coffee, butter, yoghurts, sausages) would be affected. A series of German and English products related to printing will also suffer from tariffs: decals, lithographs that are up to 20 years old, printing sheets…
The US is the leading export market for machinery. The country’s market share amounted to €19.25 billion for 2018, up 1.5% compared to the previous year.
For the German industry, the sector is the largest employer. It employs 1.35 million employees, according to the Mechanical Engineering Industry Association (VDMA).
Italy: Parmesan cheese and limoncello
Food exports to the US worth €500 million are expected to be affected by the proposed tariffs of 25%. This is out of a total of more than €4 billion.
Cheeses such as parmesan and pecorino, certain pork products (sausages, etc.), liqueurs, fruit juices and seafood will be taxed.
On the other hand, wine (whose exports to the US amounted to €1.5 billion last year), olive oil (€436 million in exports), pasta (€305 million) and canned tomatoes are excluded.
Unlike the other four major European countries, Italy is not part of the Airbus consortium.
Spain: olive oil and wine
About half of Spain’s agri-food exports to the US, worth some $2 billion in 2018, would be taxed.
“We believe that the impact on exports could reach a value of €1 billion, mainly for the agri-food sector,” Secretary of State for Trade Xiana Mendez told reporters.
Olive oil exports for the US amounted to €405 million in 2018. According to the Spanish Olive Oil Interprofessional (ASOLIVA), the sector employs 400,000 farmers, as well as thousands of people in the processing industry.
Export values of olives themselves amounted to €179 million.
The sales of Spanish wine in the US amounted to €293 million last year, but sparkling wines, such as Cava, would be exempt from sanctions, so the tariffs would reduce the business volume of the wines concerned to €240 million.
French wines and cheeses
“France is more concerned with the aviation industry than with wines and cheeses,” Jean-Baptiste Lemoyne, the secretary of state for foreign affairs, told AFP.
Last year, French wines and spirits again found their first outlet in the United States, with 18.29 million 12-bottle crates sold for €1.6 billion.
In 2018, France exported 25,000 tonnes of cheese to the United States for €176 million. The French dairy industry has studied the list published by the WTO but “will not seek to measure the impact of this measure until the list is final”, Benoît Rouyer, an economist and specialist in the sector, told AFP.
United Kingdom’s tweed and single malt
For the UK, a strange collection of textiles such as cashmere, cotton sweaters, men’s suits, women’s pyjamas, cotton blankets and sheets will be affected.
The same as for Germany, printing products from the UK also feature on the list.
Single malt whisky is also targeted, which is a major concern for Scotland.
“Even though this dispute concerns aviation subsidies, our sector has been hit hard. Single malt Scotch whisky accounts for more than half the value of British products on the US government’s list,” said Karen Betts, the director of the Scotch Whisky Association.
According to the association, one-third of Scotch whisky exports to the US for the year 2018, were single malt whiskeys. This variety would be targeted by the proposed sanctions, which, if confirmed, should apply from 18 October.
Fruits, cheeses, wines, pork
Finally, specific product categories are targeted for all EU countries.
The list published by the United States Trade Representative includes certain fruits (cherries, peaches) and their derivatives (fruit salads, pear juice, jellies, etc.), many cheeses and other dairy products (butter, cream, yoghurt, etc.), pork meat products (sausages, shoulder, etc.) and shellfish (shellfish, muss, clams, etc.).