'Hugely disappointing': US slaps tariff hikes on Irish dairy over airplane row

  • Irish products Baileys and Kerrygold targetted
  • Companies such as Kerry Group, Glanbia and Ornua impacted
  • Timing couldn't be worse - MEP
Kerrygold butter
Kerrygold butter
Ciaran Moran

Ciaran Moran

The United States on Wednesday said it would slap 10pc tariffs on European-made Airbus planes and 25pc duties on Irish dairy products, French wine, Scotch and Irish whiskies as punishment for illegal EU aircraft subsidies.

Irish products targetted include Cheeses, Butter and Liqueurs which could impact well known Irish brands Baileys and Kerrygold.

Kerrygold is the No. 2 butter brand in the US and exceeded €1 billion annual retail value globally last year.

The announcement came after the World Trade Organization gave Washington a green light to impose tariffs on $7.5 billion worth of EU goods annually in the long-running case, a move that threatens to ignite a tit-for-tat transatlantic trade war.

The measures would follow tariffs levied by the United States and China on hundreds of billions of dollars of each other’s goods in their more than year-old trade war.

The size and scope of the tariffs were reduced considerably from a $25 billion list floated by Washington earlier this year that included helicopters, major aircraft components, seafood, luxury goods and other big-ticket categories that were excluded from Wednesday’s announcement.

One person familiar with the case said the USTR was deliberately not using the full extent of WTO-approved retaliation to coax the EU to the negotiating table.

But it came with an explicit warning.

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“The U.S. has the authority to increase the tariffs at any time, or change the products affected. USTR will continually re-evaluate these tariffs based on our discussions with the EU,” the USTR said.

'Hugely disappointing'

The North American market for Irish dairy grew by 36pc to €366m last year driven by growth in the economy. Butter exports increased by 90pc to €161m. The value of cheese exports to the US grew by 20pc last year.`

A representative body for Irish dairy processors, Dairy industry Ireland described the news as hugely disappointing.

It said it had been working assiduously with processing members, as well as Irish and EU authorities to try and ensure that Irish dairy Products do not get dragged in as an unintended consequence of the Boeing aircraft tariff dispute.

Companies such as Kerry, Glanbia and Ornua are huge employers within US dairy, and Irish processers have a long record of both investment in production in the US, as well as having success in importing product from Ireland such as the Kerrygold success story.

"Irish agricultural product is already exposed to hefty duties in comparison to other industrial goods, and any escalation of this dispute will lead to damage to both the US and EU economies and consumer prices," it said.

Dairy Industry Ireland is requesting that cool heads prevail on all sides of this process and any issues are referred to a WTO dispute resolution process that would form part of a negotiated and fair solution that would not impact from our perspective Irish processors, as well as farmers and consumers.

Ireland has grown its exports of Kerrygold branded butter and cheese to the US to over 34,000t in the last decade, IFA Dairy Chairman Tom Phelan highlighted.

"These are high-value consumer products, and command a significant price premium on the market place, delivering strong margins to our sector.

“These tariffs have the potential to reduce margins or market share or both. The EU and Irish Government must make every effort to negotiate our way back to normal trade flows. WTO-approved tariff impositions are only ever for limited time periods, but coming in the shadows of Brexit, this is a serious concern for farmers and processors alike,” he said.

MEP for Ireland South and leader of Fine Gael in the European Parliament, Sean Kelly, has called on incoming European Commission President Ursula von der Leyen and new EU Trade Commissioner Phil Hogan to urgently intensify dialogue with their US counterparts to prevent the imminent imposition of the tariffs.

"The current stand-off between the EU and US is in nobodies interest, and things will only get worse now that the door has been opened to President Trump's tariffs. Citizens and businesses on both sides of the Atlantic are set to be the losers in this unfortunate situation.

"The imposition of tariffs will immediately make key Irish exports less competitive in the US market. The timing couldn't be worse with the threat of a no-deal Brexit continuing to loom over our industries," he said.

Additional reporting Reuters

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