US tariffs on Castilian-Romanian agri-food products enter into force

  • The Bank of Spain has estimated that it will imply a decrease in sales throughout the country of at least 12%
  • Castilla-La Mancha, the region that exports more cheese to the US, will affect the production of cheese, oil, and wine

US tariffs on European agri-food products, in retaliation for the conflict over public aid to Airbus under the WTO, enter into force this Friday, October 18 and will especially tax Castilian-Muslim productions such as wine, oil, and cheese.

This decision is based on the resolution by the arbitration panel of the World Trade Organization (WTO) of a dispute over subsidies of the European Union (EU) to civil aviation, which has authorized the United States to impose countermeasures on EU for 6,800 million euros (affecting Spain for a value of around 790 million euros).

The Bank of Spain has estimated that the increase in tariffs on Spanish agri-food products from the current 3.5% to 25%, will imply a decrease in sales of these products to the US economy of at least 12%, that is, about 95 million euros, almost € 0.01 of GDP.

Currently, according to the data offered by the director of the Institute of Foreign Promotion, in 2018 the total exports of the region to the US amounted to 253 million euros. “This is the sixth country in the ranking of destination of the region’s products abroad and the first outside the European Union. Sales to the United States represent 3.4% of the total exports of Castilla-La Mancha ”.

The cheese occupies the first position in exports with 51 million euros since Castilla-La Mancha is the main exporting region of cheese to the United States. In 2018, about 60% of the Spanish cheese sold in the United States came from Castilla-La Mancha.

The fourth chapter in importance in exports to the American country is beverages, in total, they represent 19 million euros of which 9.5 million euros is bottled wine. The fifth is the chapter on oils, with about 15 million euros exported from olive oil.

Sixth most affected country

Customs technicians, represented in Gestha, have estimated that approximately 700 million euros of certain Spanish exports will bear a new tariff cost of almost 120 million euros.

In this way, Spain will be the sixth country in the European Union that will suffer most from the new tariffs in the United States, behind Germany, France, the United Kingdom, Italy, and Ireland.

However, Geetha says that the impact of the measure in Spain will affect only 0.7% of all Spanish exports and for the sectors affected by the US measures will be “significantly lower than expected”, as sales to this The country accounts for 4.5% of world exports, and only 5.5% of them will be affected by the tariff.

At the same time, tariff measures jeopardize sales to this country of the eight most affected sectors – olive oil, wine, olives, cheeses, and other dairy products, pig products, juices, liquors, mollusks and prepared or preserved fruits –, and could mean the loss of more than 5,000 jobs in Spain.

Oil, wine and cheese

The Spanish products most affected by the tariff increase that will be applied by the Government of Donald Trump will be virgin olive oil, olives and olive oil, whose presence in the US market is almost one-fifth of oil exports and 23, 7% of olive exports.

At the same time, the United States market for Spanish wines in 2018 was the fourth in terms of Spanish exports in value, with a total of 325 million euros exported and a volume of 90 million liters.

With regard to the affected wine (quiet wines packaged below 14 degrees), the value of exports in 2018 would be around 240 million euros, since categories such as sparkling wines or generous wines are excluded.

As a result of this tariff policy, the Spanish agri-food sector has allied to exert negotiating pressure until the last moment, both in the direct relations of the Spanish Executive with the United States and by the European Union, to reach an agreement that avoids the application of tariffs or at least their “freezing”.

Spain exported 1,843.47 million euros last year to the United States and the North American country is the first destination market for food and beverage exports after the European Union.

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