From Bordeaux wine to jamón and Parmesan—what the EU-U.S. tariffs truce means for consumers

June 16, 2021, 2:36 PM UTC

Foodies and oenophiles, rejoice.

After 17 contentious years, the U.S. and EU this week called a kind of truce on the Airbus-Boeing trade dispute, meaning all manner of delectables, which have no connection whatsoever to aircraft parts—French wine, Italian cheese, and Spanish ham—will, for a time, no longer be subject to trade tariffs.

Europe’s farmers, cheesemakers, wine producers, and their trade bodies praised the deal. For the first time in years, renowned European goods, from Côtes du Rhône wine to the prized cured meat jamón Ibérico, will be subject to normal trade terms upon entering the U.S. For European exporters who send most of their goods to the U.S., it’s welcome news—even though the détente will expire in five years.

Since October 2019, when the latest round of World Trade Organization–sanctioned tariffs went into effect, the two trading partners have slapped punitive tariffs on each other’s exports amounting to over $3.3 billion. American goods like peanut butter, suitcases, and tobacco got caught up in the dispute as well.

The following product categories are impacted by the truce. In some circumstances, consumers could find they have become cheaper.

France: Bordeaux wine, and cognac, too

The French wine and spirits exporter group FEVS has welcomed the drop of the 25% tariff on exports, noting that the taxes had severely disrupted the wine and spirits industry. FEVS calculated that, since October 2019, lost sales amounted to €450 million ($546 million).

César Giron, président of FEVS, has been calling for better trade terms, arguing the sector had been hit “hard and unfairly.”

Italy: cheese, cured meat, and liqueur

Italian cheeses such as Asiago, Grana Padano, Gorgonzola, and provolone are also tariff-free now, as are Italian salami and mortadella and the lemony liqueur limoncello.

Another victor? Fans of Parmigiano-Reggiano—a.k.a. Parmesan. That Trump era tariff was particularly unpopular.

“The United States represents the biggest export market outside the EU borders for the ‘Made in Italy’ agri-food sector,” said Ettore Prandini, president of Italian agriculture lobby Coldiretti. Italy’s food and drink industries sent €4.9 billion of goods to the U.S. in 2020 alone. Prandini called the truce an “important start” in delivering mutual growth for Italian and U.S. exporters.

Spanish ham

In Spain, ham is a national dish. Exports of the famed jamón Ibérico will now trade between the two countries under more favorable terms. That’s good news for Spanish farmers who were shocked by talk of trying to produce the ham in Texas.

Scottish goods

Scottish cashmere producers, pig farmers, and whisky makers have already celebrated after Biden lifted tariffs in a U.K.-EU trade agreement in May this year.

American products

Meanwhile, the EU will also benefit from reduced tariffs on big U.S. exports like ketchup, cheddar cheese, peanuts, cotton, and potatoes, along with tractors, consoles, and video games.

But according to the U.S. Dairy Export Council, more work has to be done to get U.S.-EU trade relations on the right path. Jim Mulhern, National Milk Producers Federation president and CEO, said that dairy trade with the EU is too often a “one-way street,” noting that “U.S. exporters continually have to chase new mandates by the European Union to retain our current access, even when there are no safety concerns with American dairy products.”

A long 17 years

The dispute began in 2004, when the U.S. lodged a legal case with the WTO against EU member-state support to Airbus—which is publicly traded but collectively operated out of a host of European countries. In a tit-for-tat move, a parallel case was opened by the EU, which argued that Boeing benefited from U.S. subsidies, as well as from space and military contracts.

The conflict came to a head in 2019 when the WTO agreed the U.S. was within its rights to level tariffs against EU exports as payback for the subsidies Airbus had received over the years.

As part of the terms reached this week, tariffs will be suspended for the next five years. The two sides also created a trade-minister–level working group to discuss subsidy limits and to ultimately boost transatlantic relations.

Meanwhile, the good news for consumers and companies: The deal would spare up to $11.5 billion worth of EU and U.S. consumer goods from being hit with punitive tariffs. 

In the agreement, the two sides also pledge to work together to address “non-market practices of third parties.”

That’s seen as a reference to trade giant China, which could mean the trade war simply heads to the East.

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