US to impose higher tariffs on EU dairy products

Friday, 4 October 2019

By Felicity Rusk

The World Trade Organisation (WTO) have announced that the United States would be allowed to apply up to $7.5 billion of retaliatory tariffs a year on products imported from the EU. This is as a result of the Airbus-Boeing dispute.

As such, the United States have published a final list of EU products affected by the additional duties, which will be implemented from the 18 October.

The final list of EU products includes a selection of yogurt, butter and cheese trade codes, although the largest impact will be on cheese. The cheese codes cover a range of speciality European cheeses, including Cheddar. The additional duties have been set at 25% ad valorum i.e 25% of the value of that particular product.

However it is important to note, that the tariffs applied vary between member states

What will this mean for the UK?

In terms of affected products, UK dairy exports will be subject to all the retaliatory tariffs. Tariffs will be applied to both yogurt and whey products. However, the UK has historically not exported these products to the US in any substantial volumes.

   

Cheese exports are likely to be the most impacted by the implementation of the tariffs. Last year, the UK exported around 7,700 tonnes of cheese to the US, around 4% of the UK’s total cheese exports. Almost all (>99%) of this is product that would be hit by the tariffs.   

All of the UK’s butter exports to the US will be impacted by the tariffs, although the US accounted for less than 1% of UK butter exports last year.

For the UK market overall the impact of the tariffs is likely to be fairly limited. However, the impact on individual businesses will vary greatly depending on what proportion of their sales is with the US. In particular, a high proportion of the cheddar and butter trade with the US is in organic products, and the tariffs are likely to cause significant harm to this trade post 18 October. 

So why are these tariffs being applied?

Earlier this year, the WTO ruled the EU gave illegal subsidies to the airplane manufacturer Airbus. This gave the company an unfair advantage over others, including the US company Boeing. As a result, the WTO has allowed the US to impose additional tariffs on products imported from the EU, to recover the money it has estimated to have lost out on. The tariffs encompass a wide range of products.

The full list of affected products can be found here.


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