Wednesday, 29 January 2020
By Kat Jack
In mid-October 2019, the US applied retaliatory import tariffs to a wide range of EU products, including a selection of dairy products. This was following the WTO ruling on the aircraft subsidies dispute. These tariffs cover a large proportion of EU exports to the US, including nearly all cheese sent from the UK. November trade data allows us to see the initial effects of these tariffs.
There was a reduction in EU cheese exports to the US in November 2019. Total cheese exports were down 26%, compared to November 2018. Export value fell similarly, with the average unit price largely unchanged. However, there is also a seasonal peak in EU exports to the US, and a subsequent dip. It appears that in 2019 trade peaked earlier than in previous years, making November trade relatively low.
A preliminary list of products was released by the US in April 2019, which included dairy products. Although the official list of tariffs was not published until early October, it is probable that producers exported earlier than usual in anticipation of it.
Total cheese exports to the US in November 2019 were down by only 40 tonnes on the year, suggesting not too much disruption to trade. However, the value of these exports dropped. In November 2018 the average unit price was £7,355/tonne. In November 2019, it was £5,966/tonne – 19% less. In the two months before both volume and value were in growth. This suggests that in order to maintain trade, UK exporters had to reduce prices to accommodate the tariff costs.
In December, the WTO ruled that the EU had failed to stop providing subsidies to airbus – the initial cause of the dispute. Following this, the US has suggested it could review the tariffs and even increase them, so there is the potential for further disruption in the future.
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