Sebastien Latz, director general of the French wine producer MDCV, inspects bottles of rosé in a wine production facility in the Chateau des Bertrands vineyard in Le Cannet-des-Maures, in the Provence region, on Thursday. (AP Photo/Daniel Cole)

Sebastien Latz, director general of the French wine producer MDCV, inspects bottles of rosé in a wine production facility in the Chateau des Bertrands vineyard in Le Cannet-des-Maures, in the Provence region, on Thursday. (AP Photo/Daniel Cole)

Europe’s specialty food makers brace for US tariffs

“It’s a nightmare,” says Aurélie Bertin, who runs the 700-year-old winery Chateau Sainte-Roseline.

By Colleen Barry and Claire Parker / Associated Press

MILAN — European producers of specialty agricultural products like French wine, Italian Parmesan and Spanish olives are facing a U.S. tariff hike due Friday with a mix of trepidation and indignation at being dragged into a trade war they feel they have little to do with.

The tariffs on $7.5 billion worth of European goods were approved by the World Trade Organization as compensation for illegal EU subsidies to plane maker Airbus.

The U.S. has some leeway in deciding what goods it puts tariffs on. So while it is taxing European aircraft 10% more, it is walloping agricultural products an extra 25%.

“It’s a nightmare,” says Aurélie Bertin, who runs the 700-year-old winery Chateau Sainte-Roseline in southern France. “We don’t know what will be the result.”

Her rosé wine business has boomed in recent years thanks to American demand for the beverage. She fears her U.S. sales could drop by a third under the new tariffs.

The punitive taxes take particular aim at European agricultural products that have a “protected name status.” Those are goods that can be sold under a name – like Scotch whisky or Manchego cheese – only if they are from a particular region and follow specific production methods. The result is they fetch premium prices, protect cultural heritage – and are shielded from competitors.

U.S.-made Parmesan cheese, for example, is not allowed access to the European market as a copycat of the traditional Parmigiano Reggiano and Grana Padano – a barrier that the U.S. milk producers lobby are pressuring to bring down.

Italian President Sergio Mattarella sought to impress on U.S. President Donald Trump during a White House Visit on Wednesday that the taxes may result in a “mere race between tariffs” after the WTO decides Europe’s case later this year over U.S. subsidies to Boeing. Trump was undeterred.

European producers feel they are collateral damage from a political squabble entirely unrelated to their business.

“We consider that we are hostages of politics. We are very, very far from aeronautics, even if our wines are served on planes every day,” said Burgundy wine producer Francois Labet.

The president of the Parmigiano Reggiano cheese consortium, Nicola Bertinelli, said that its members “are embittered because one of the strongest sectors of our economy is being unjustly hit.” He noted that Italy doesn’t even participate in the Airbus consortium of countries that prompted the penalties.

The four stakeholders in Airbus – Spain, France, Germany and Britain – were targeted with more tariffs than other EU countries. Spanish olives, for example, have been singled out, while those from Italy and Greece have been left alone.

That has created additional anxieties, with Spanish olive producers worried that U.S. buyers will turn to buying from Italian companies instead.

The U.S. tariffs appeared to be selectively chosen to hit premium items that well-heeled U.S. consumers could continue to afford even at higher prices – and not sectors that would more directly correlate to the unfair subsidies for Airbus, which could put a damper on the U.S. economy, said Gianmarco Ottaviano, an economics professor at Milan’s Bocconi University.

“We don’t see a lot of tariffs on things that Italy is exporting a lot, like machinery. The reason is that this is probably more useful than Parmesan cheese to the U.S. economy,” he said. “You want to punish, but at the same time, you don’t want to shoot yourself in the foot.”

A tariff is essentially a tax on importers and for small U.S. retailers , they come at a bad time ahead of the holiday season.

WTO-authorized sanctions are supposed to prod the trade combatants into resolving their differences. But Trump, who has labeled himself “Tariff Man,” has enthusiastically slapped import taxes on foreign steel and aluminum and on thousands of Chinese products in separate disputes and has bragged that the levies raise revenue for the U.S. government.

“There should be negotiations,” said Rufus Yerxa, president of the National Foreign Trade Council in Washington and a former U.S. trade official. “Unfortunately, it seems like we’ve got a president who’s tariff happy. That makes it harder to get those kinds of negotiations and remedies in place.”

U.S. wine retailers, distributors and importers already expect some customers to seek alternatives from countries whose products aren’t being taxed. And any signs that customers are balking at higher prices will force retailers to absorb their increased costs.

The vice president of Italy’s main industrial lobby, Lisa Ferrarini, said that European producers could in the longer-term shift exports away from the U.S. market. But director of the Spanish food and beverage industry director disputes that logic, saying, “there is no alternative to the American market.”

European producers and diplomats were still pressing for a last-minute change of heart using all available channels, from social media to diplomacy.

Italy’s agriculture minister, Teresa Bellanova, tweeted a photo to Trump promoting grapes and Italian Parmesan as a healthy snack, and the president of the Emilia Romagna region, where much of the cheese is produced, has launched a social media campaign in support of the product.

Trump, meanwhile, rebuffed Mattarella’s in-person overtures, arguing that Europe “has taken tremendous advantage of the United States.”

France’s finance and economy minister, Bruno Le Maire, will make another attempt to soften the tariff blow when he meets with U.S. trade negotiator Robert Lighthizer in Washington on Thursday. Le Maire told Europe 1 radio he will warn Lighthizer that Europeans would strike back if the tariffs take effect on Friday.

“We, Europeans, will take similar sanctions in a few months, maybe even harsher ones – within the framework of the WTO – to retaliate to these US sanctions,” he said.

Talk to us

More in Herald Business Journal

Twins Leslie Davis (left) and Lyndsay Lamb stage a house in Everett as seen on the second season of "Unsellable Houses" on HGTV. (HGTV photo)
Sold: Snohomish twins back for more HGTV ‘Unsellable Houses’

The makeover show’s 13 episodes feature Snohomish County homes, with decor items sold at new store.

Tuesday's career fair will be at Everett Community College, which incidentally is also one of the participants. (Sue Misao / Herald file)
Snohomish County Career Fair set for Tuesday at EvCC

Job seekers can connect with more than 40 employers at this year’s annual event.

Workers build the first all-electric commuter plane, the Eviation Alice, at Eviation's plant on Wednesday, Sept. 8, 2021 in Arlington, Washington.  (Andy Bronson / The Herald)
All eyes on Alice, the electric plane made in Arlington

If all goes well, Eviation’s battery-powered airplane will make its debut test flight later this year.

Snohomish County unemployment rate drops slightly to 5.6%

Washington added 16,800 jobs in August.

Report: Criminal indictment coming for former Boeing official

Mark Forkner was the 737 Max Chief Technical Pilot who is alleged to have lied to aviation regulators.

Bufeng Gao, owner of Qin Xi'an Noodles, receives a check from the Edmonds Chamber Foundation's Wish Fund outside of her restaurant that was burned in a fire on Thursday, Sept. 16, 2021 in Edmonds, Wa. (Olivia Vanni / The Herald)
After arson burns Edmonds plaza, 14 businesses need help

Plum Tree Plaza — a cultural hub for Asian Americans — burned in a three-alarm fire early Sept. 11.

Hand drawn vector illustration of bottle of red wine and two glasses. Abstract cartoon style isolated.
You voted: The best wine list in Snohomish County

Even during a pandemic, folks still have their favorites.

Boeing sells land for $200M in plan to shrink holdings

Boeing has sold 310 acres of undeveloped land next to its Frederickson manufacturing plant.

Washington August jobless rate was 5.1%; 16,800 jobs added

August’s rate was the same as July’s rate, and increased even as COVID-19 cases surge.

Boeing moving 150 jobs from Washington and California to Texas

The affected jobs are in the company’s global parts distribution unit.

Commercial Aircraft Interiors General Manager James Barnett stands in a warehouse aisle of 777 overhead bins at the company's new building on Monday, May 20, 2019 in Arlington, Wash. (Andy Bronson / The Herald)
12 Snohomish County aero firms get $19M for job protection

The Aviation Manufacturing Jobs Protection grants could save 2,280 Washington jobs for up to six months.

FILE - The logo for Boeing appears on a screen above a trading post on the floor of the New York Stock Exchange, Tuesday, July 13, 2021. Despite the pandemic's damage to air travel, Boeing says it's optimistic about long-term demand for airplanes. Boeing said Tuesday, Sept. 14, 2021 that it expects the aerospace market to be worth $9 trillion over the next decade. That includes planes for airlines and military uses and other aerospace products and services. (AP Photo/Richard Drew, file)
Pandemic hasn’t dimmed Boeing’s rosy prediction for planes

The company is bullishly predicting a $9 trillion market over the next decade.