Monday 21 October 2019

Irish dairy dragged into trade war as Trump slaps 25pc taxes on Kerrygold and Baileys

‘Nice victory’: Donald Trump welcomed the tariffs on EU goods. Photo: Reuters
‘Nice victory’: Donald Trump welcomed the tariffs on EU goods. Photo: Reuters

Ellie Donnelly and Ciaran Moran

Kerrygold Butter and Baileys Irish Cream Liqueur have been thrust dramatically into the frontline of the global backlash against free trade, after Donald Trump's US government slapped them with punitive import taxes.

Irish producers are collateral damage in an escalation of already tense transatlantic trade relations.

Irish dairy products and liqueurs will be hit with import duties of 25pc entering the US, after being included in a hit list of products that also includes French-made wine and airliners, and whiskey made in Northern Ireland and Scotland.

Whiskey made in the Republic, such as Jameson, narrowly escaped the hit list but Northern Ireland-made Bushmills and dozens of Scottish labels are hit.

Yesterday Mr Trump hailed as a "nice victory" a ruling by the World Trade Organisation that the US has a right to place tariffs on European Union goods worth $7.5bn (€6.8bn) because four member states - France, Germany, Spain and the United Kingdom - gave soft loans to airplane maker Airbus.

The tariffs will drive up the cost to US consumers of the Irish products to levels where they'll struggle to compete.

Despite calls from Brussels for calm, the US immediately issued a list of products that will be hit with tariffs from October 18, the earliest possible date. It will slap 10pc tariffs on European-made planes and 25pc duties on affected food and drink.

Ireland is being hit despite no suggestion of wrongdoing by the Government or any businesses, but a number of food and drinks are collateral damage - including cheese, butter and liqueurs.

Kerrygold is the second best-selling butter brand in the US where its popularity helped global sales top €1bn last year.

The North American market for Irish dairy grew 36pc to €366m last year - butter made up €161m of that. The value of cheese exports grew 20pc.

The scattergun, almost random nature of the US tariffs has created winners and losers. French group Pernod Ricard's Irish Distillers, including the best-selling Jameson whiskey, escaped the tariffs. Rival Diageo is hit on two fronts - Baileys and its Scottish single malt whisky brands are both hit.

Diageo buys the cream from 230 million litres of Irish milk - 3pc of the country's total production - to make Baileys, meaning, like butter and cheese, the Trump tariff ultimately means bad news for dairy farms.

IFA dairy chairman Tom Phelan said European intervention was needed.

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

The representative body for dairy processors, Dairy Industry Ireland, described the news as hugely disappointing.

MEP for Ireland South Seán 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.

Drinks Ireland director Patricia Callan said she was "particularly disappointed" spirits categories had been dragged into a trade dispute about unrelated sectors.

Irish Independent

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