US penalty tariffs set to hit UK agri-food products

The US is planning to impose tariffs of almost $7.5bn on a range of EU products, with many UK products set to affected.

“Dozens of products are facing additional tariffs of 25%,” warns AHDB in a summary written by Market Intelligence Director, Phil Bicknell (pictured above).

The US action follows the World Trade Organisation (WTO) ruling where the EU was judged to have fallen short of WTO rules in supporting aircraft manufacturer Airbus. The effective date of the additional duties is October 18, 2019.

The additional 25% duties apply to a wide range of products. This includes single malt whisky, which is one of the UK’s most significant exports to the US. Pork and dairy products are also on the list, as well as horticultural products.

“As it stands, the list of products is for information only,” commented Mr Bicknell. “The definitive product coverage will be determined by the US Trade Representative, with USTR saying it would continually re-evaluate these tariffs based on discussions with the EU.

“So there is potential for the list to change ahead of implementation on October 18th. Effectively, it makes imports of the identified products into the US more expensive. What impact this has on volumes and trade of specific products will be seen in the coming months, but economic logic tells us that higher prices curb demand and it’s reasonable that UK exports of these products will be impacted.

“Normally, I’d urge us to keep this in perspective. UK dairy exports to the US are worth an average of £58 million (2016-18), and account for 4% of our total dairy exports (2016-18 average). However, we’re not in normal circumstances.

“The uncertainty of our trading relationship with the EU is a big issue for UK food and farming. It’s currently the main destination for our food products and the potential imposition of what are, in many cases, considerable tariffs on that trade would be detrimental.”

There’s also the on-going Brexit factor, of course, another point covered by Mr Bicknell.

“The switch in trade dynamics means that our attention shifts to global opportunities and the US has been regularly referenced as a country we’d target in striking new trade deals,” he said. “Yet US analysts have clearly identified specific product lines that they want to target in this dispute.

“In my view, this degree of preparation has relevance for any future trade negotiations, and we shouldn’t be in doubt that US authorities would be targeting UK agriculture as an area where they want improved market access. More widely, it’s a timely reminder that operating in global markets brings with it greater exposure to global geo-political volatility.”

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