Bordeaux, Camembert, Scotch whiskey, Parmesan cheese. These are some of America’s favorite delights that could see drastic price hikes if President Donald Trump’s administration moves ahead to impose trade tariffs up to 100 percent on a slew of European Union (E.U.) imports.
Wholesalers, retailers, grocers, wine shops, restaurants and tourist destinations in Arizona and across the nation already are reeling from a 25 percent tariff imposed on imported fine wine and spirits, cheese, olives, olive oil, coffee and other products at the end of last year.
Another punishing round this month would hurt businesses that distribute and sell European products their customers love, pushing prices out of their reach.
“When you really look at tariffs, they’re cost drivers,” said Dan Bogert, chief operations officer of the Arizona Restaurant Association (ARA). “They will only increase prices in Arizona where we’re already dealing with increased minimum wages, a tight labor market, and increased regulatory requirements.”
That means lost sales, lost customers, and lost jobs, concerned industry advocates are telling Washington.
“You can imagine (the impact). Virtually every restaurant I’ve walked into, from casual all the way up to fine dining, they usually have a selection of fine wines,” Bogert said.
In Arizona, the restaurant industry is expecting $14 billion in sales this year. About $5.3 billion of that will be the payroll for almost 235,000 employees.
“At the end of the day, the primary fear is, anytime you are increasing prices on one sector of the supply line, you’re going to see increased prices across the board,” he said.
Trade dispute started over jet aircraft, not food and drink
This trade issue began over jet airliners — not food and drink.
It arose from a decades-old World Trade Organization (WTO) dispute between Airbus and Boeing — the world’s only major large passenger aircraft manufacturers — and the subsidies they receive from their respective governments.
The WTO ruled in December that the E.U. provides unfair subsidies to European planemaker Airbus, and supported the U.S. case for retaliatory tariffs. The ruling permitted the U.S. to apply the duties against any imports from the E.U., not just aircraft, something called “cross- retaliation.”
That’s how European wine got in the dispute, said Glenn Fong, an associate professor at the Thunderbird School of Global Management at Arizona State University.
“The situation the European wine industry as well as the U.S. restaurant and hospitality industries find themselves in is a reminder to all businesses that they can be caught up in a trade war totally unrelated to their business,” Fong said.
More products could be targeted
The WTO award of $7.5 billion annually is based on the amount of E.U. subsidies given to Airbus, but the ruling is against the E.U., not Airbus, Fong said. The award of $7.5 billion annually is by far the largest award in WTO history, nearly twice the largest previous award.
“By the way, the WTO has yet to rule on the Boeing subsidies case, so more cross-retaliation may be around the corner,” Fong said.
Gouda cheese, Irish and Scotch whiskey, olives, wafers, coffee
The USTR is proposing tariffs of up to 100 percent on more than 100 products, including almost all wines and spirits produced by the 28-member E.U.
Many are among Arizona’s top 20 trading partners, including France, Germany, Italy, Spain and the Netherlands.
Call to Congress: kindly back off
Restaurant and wine industry advocates and other groups are calling on Congress to hold off on new tariffs.
Dragging out the fight over airplane subsidies could double prices of European wines in the U.S. and kill markets here, they warn.
In a letter to Democratic and Republican leaders in Congress last month, the National Restaurant Association stated that it supports efforts to protect U.S. government and business rights in international trade, but it is “extremely concerned” that the proposed duties will cause significant harm to America’s restaurants.
The Association urged congressional leaders to ask administration trade officials to resolve the issue without causing undue harm to the industry’s 15 million employees and millions of customers they serve.
The group said the proposed tariffs are unrelated to food, beverage and hospitality industries, yet they would “cripple the industry and seriously impact employers, employees and consumers.”