US tariffs on EU dairy will hit hard says Rabobank – eDairyNews
United States |9 octubre, 2019

Dairy | US tariffs on EU dairy will hit hard says Rabobank

Mary Ledman, global dairy strategist at Rabobank, says the US tariffs on EU dairy products will have a big effect.

In total about 107,000 metric tons of EU dairy products fall into the 65 HTS codes subjected to an additional 25% ad valorem tariff on October 18.

US total cheese imports tallied nearly 176,000 metric tons in 2018, with EU cheeses representing 134,000 metric tons, Ledman said.

The 58 cheese HTS codes subject to the additional tariff represent about 55% (73,000 metric tons) of US imports of European cheeses in 2018, and Ledman said Italian cheeses are most vulnerable, with nearly 20,000 metric tons (about 60%) of their 2018 cheese exports to the US covered by HTS codes subject to the additional tariff.

Ireland will feel the brunt of the additional tariffs on both butter and cheese exports to the US, Ledman said. The combined Irish cheese (20%) and butter (80%) exports to the US in 2018, totaled more than 35,000 metric tons that would be subjected to the additional tariff. Through July 2019, Irish butter and cheese exports are running ahead of the prior year by more than 30%, likely in anticipation of the potential higher tariffs.
Market impact

“The longer the higher tariffs are imposed, the greater the market erosion,”​ Ledman said.

“In the short-term, less than three months, limited market impact is expected. Longer-term, higher-priced imports will face greater competition from both domestic and global specialty butter and cheese manufacturers.​

Ledman added that a 25% surcharge on top of an already expensive product could have customers choosing a less-expensive domestic cheese or non-EU import. Many imported European cheeses are marketed and distributed by specialty food companies, which also carry domestic specialty cheeses in their product lines.

As a result, an additional 25% tariff on European cheeses is likely to reduce the competitiveness of European cheeses in the US market, decrease the promotional activity of European cheeses, encourage US consumers to explore less-costly domestic specialty cheeses, and provide a competitive advantage to non-EU imported specialty cheeses, Ledman said.

“Collectively, the EU-28 can ill afford to lose the US as a market for over 73,000 metric tons of cheese, especially with the uncertainty of a hard Brexit looming, which would place the UK’s 400,000 ton cheese market up for grabs.”​

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