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Focus November 2019

American tariffs harm some of our exports

The wailing, however, appears excessive.

The imposition of tariffs is never good news, being a symptom of protectionistic trade wars. However, tariffs make domestic producers happy when they operate on imports (for instance those on low-cost rice imported from Asia), while inducing melancholia in exporters to countries that have installed them. They were once a common weapon deployed by states, but over time, with globalisation, this implement lost its edge and tariffs were lifted or much reduced. From the 18th of October, tariffs were heavily increased, in the order of 25%, by the United States on certain agricultural and food products from the European tCommunity, including, therefore, Italy. This threat, which has now sadly materialised, was already discussed in the July Focus, and we are hardly pleased by it, even though France, the UK and Germany are faring even worse. To be clear, this imposition required by the USA was approved by the WTO (World Trade Organisation) as punishment for public financing of Airbus, and we now await the WTO’s verdict - expected by next summer - on subsidies to the American Boeing; but for now, we’re the ones who pay.
The main products affected are parmigiano reggiano, grana padano, provolone, soft pecorino sheep’s cheese (as opposed to aged and firm, for grating), mozzarella (fiordilatte, meaning from cow, not water buffalo, milk), gorgonzola, salami, mortadella, digestives and liqueurs. Hams, wines (no small thing, considering exports of Prosecco and similar products), olive oil and pasta are safe. The news has raised an enormous outcry and even fears of exports being “nullified, or nearly so”, with “dramatic commercial and social repercussions”. There have even been threats of popular demonstrations in front of American military bases in Italy. Good heavens! Price increases up to 50% for consumers, and national losses in the order of 500-700 million Euros, are predicted. This benefits domestic American products and ‘Italian-sounding’ foods, namely counterfeit foods which harm our exports, which, however, double annually. As above, this imposition is unwelcome for us, but it seems excessive to tear one’s hair and shriek ‘all is lost’ while babbling random numbers and predictions (20% consumption decrease!), unless this is aimed at soliciting state subsidies. In the USA, consumption of these niche products is ultimately stable, so a price increase from $8 to $9.60 for a 200-gramme piece of cheese will not greatly contract the market. Nor can we exclude that the mechanism will act as an international leveller for some products such as wine (penalised in France) and oil (penalised in Spain), providing advantages for us.
We hope that our exporters will not, as usual, pass all additional costs to end consumers: considering prices in Italy, especially those imposed on international exporters, it seems to us that there are sufficient margins to accommodate these increases. Our products’ high quality, and our American consumers who love Italian cooking, deserve special treatment without raising alarms and imploring the assistance of the government and the European Community. In this trade war, we are punished through no fault of our own. For now these taxes are projected for four months; thereafter, we shall see. States are more temperamental than people.
While we wait, some have solved the problem. Eataly, in New York, proudly offers Varzi and Felino salame produced in Utah and finocchiona made in New Jersey. Well played!

Paolo Petroni
President of the Academy