Dairy

Why US Duties Are a Fatal Risk for Italy’s Dairy

The US administration proposal to impose additional tariffs (100%) on all cheeses and dairy products exported from Italy would have a devastating impact on the economy of the sector

Following the dispute between the EU and the US over state aid in the aviation sector, the Office of United States Trade Representative (USTR) has published two blacklists of products on which very high additional duties are threatened. The lists include all Italian cheeses exported to the United States. In terms of volume, value and reputation such products are undoubtedly the most important for total exports: Pecorino Romano, Parmigiano Reggiano, Grana Padano, Gorgonzola, and Provolone.

ITALY’S DAIRY EXPORTS TO THE USA

According to an analysis by Assolatte – the association representing Italian dairy producers – last year Italian companies exported to the USA 31.5 thousand tons of cheese, worth 273 million euros and with an average free-at-frontier price of €8.7/kg. With current duties (which amount to 15% in value and concern a large part of Italy’s products, with the sole exception of Pecorino cheese), the taxes paid to the US amounted to about 30 million euros – with an incidence of about one euro per kg of exported cheese. 

THE THREAT OF DUTIES

If the US threat of 100% additional duties on all F&B products were to come true, the Italian dairy sector would suffer an economic impact of 240 million euros. In a moment, the cost of Italy’s cheeses would rise by €7.5/kg. That would be the end of exports to the US market for Italian cheeses. According to Assolatte, this would be a “disproportionate and unjustified” measure. Compared to the value of European exports to the USA (500 billion dollars)Italian cheeses represent only 0.06% of the total. According to the duties threatened by President Trump, the Italian dairy sector should bear almost 2% of the additional duties.

exports-container-duties-tariffs-Origin Italia

TRADE WAR VICTIMS

Without forgetting that Italy has nothing to do with the lawsuits of subsidies to Airbus and that cheeses should not be taken into account in a dispute that concerns a sector so far from the food industry. The same general principles of the WTO provide that only products falling within the sector for which a violation has been ascertained can be subject to a trade countermeasure. Assolatte strongly hopes that “the dialogue between the European Commission and the US administration will bear fruit and that the Italian government will take every possible initiative to avert the danger. Such a severe blow to our exports would have devastating effects on all the Italian dairy production chain.”

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