Irish butter and whiskey part of €3.5bn tariffs in US-EU trade war

Margaret Donnelly and Claire Fox

The Irish dairy and drinks industry could face increased tariffs as the US threatens an additional €3.5bn ($4bn) in tariffs on EU goods.

The US government looks set to push ahead with further tariffs as the EU-US trade war that stems from a long-running dispute over aircraft subsidies.

Irish whisky brands and butter are some of the products on a list of goods facing the tariff increases. Butter was on the original list, produced in April, but now whiskey has been added in an additional list.

In April the US announced that it was considering putting additional tariffs on European products. These tariffs would include 44 dairy items including butter, cheese and yoghurt products.

The move to increase the list of products is considered a doubling down of efforts by the US.

Irish butter exports to the US are worth €161m, largely due to the popularity of Kerrygold in the market, while the US is also the dominant export destination for Irish whiskey worth around €340m.

But now they face increased tariffs as the US threatening tariffs on $4 billion of EU goods as it said it is looking to add 89 tariff sub-categories to its initial list created earlier this year.

The US Trade Representative’s office released a list of additional products including olives, Italian cheese, butter Irish and Scotch whiskey - that could be hit with tariffs, on top of products worth $21 billion announced in April.

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Nearly almost all of the US imports of Ireland's butter and cheese are covered under the 44 tariff codes.

This move comes after the US announced in April that it was considering putting additional tariffs on European products.

The US administration said it would hold a hearing on the proposed additional products in August.

Last year, the US imported over 230,000 metric tonnes of EU dairy products compared to the EU which imported less than 23,000t.

Four countries represented 65pc of the US dairy products to imports from the EU under the selected tariffs - Ireland 25pc, France 21pc, Italy 12pc and Spain 8pc, according to figures from Rabobank.

In the event of these tariffs being implemented Rabobank said that Ireland would be most at risk as it exported over 34,000t of butter to the US in 2018. Rabobank said that the majority of Irish dairy exported to the US would be subject to tariffs.

The report said that the worst case scenario would be if an additional 100pc tariff was added as US customers would have to pay double the price for European butter, which would be harmful as EU branded butter is already twice the price of US branded butter.

The nearly 15-year-old dispute has seen recent threats between the two trading blocs include billions of dollars of tit-for-tat tariffs on plane, tractors and food.

Additional reporting Reuters.

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