Wine Country: Wine and cheese hit hard from Trump tariffs

“A report commissioned by the group found the U.S. alcohol industry stands to lose nearly 36,000 jobs and more than $1.6 billion in wages in 2020, under the 25 percent tariffs, delivering a $5.3 billion hit to the U.S. economy.”

Wine and cheese hit hard from Trump tariffs

The HILL By Alex Gangitano

U.S. cheese and wine businesses say they have taken a sharp hit from retaliatory tariffs between the Trump administration and Europe and fear there is no relief in sight.

Industry groups and businesses have highlighted the first numbers since the tariffs took effect, showing rising costs for importers and a drop in exports.

And those woes are likely to intensify, they warned, after the Office of the United States Trade Representative on Friday said they would keep in place the 25 percent tariff on imported wine and cheese products from the European Union.

The Trump administration leveled the tariffs on European products in October in retaliation for subsidies to aircraft manufacturer Airbus. The U.S. is targeting the United Kingdom, France, Germany and Spain, countries where Airbus planes are built. But American importers say they are the ones bearing the brunt of the trade war.

“Companies like mine are the ones that we should be celebrating in this country. Family business, third-generation, 75 years. But yet we’re being punished, and this industry has nothing to do with airplanes,” said Tom Gellert of food import company Gellert Global Group.

Gellert said a member company, New Jersey-based Atalanta Corporation, which imports cheeses, paid an extra $3 million in tariffs from October through the end of the year.

“That’s a tremendous burden for an organization like ours,” said Gellert, the president of Atalanta. And he warned of the ripple effects.

“We feel that it’s going to have an impact, not just on our business but every business that we touch because our product then gets shipped to distributors and ends up at supermarkets and restaurants across the country.”

Philip Marfuggi, the president and CEO of The Ambriola Company, which is also in New Jersey and also imports cheeses, said the tariffs have cost his company as well.

“Each container that comes in after [October] 18th that arrived into port that cleared customs, was an additional $55,000 to $68,000 extra that we would have to pay for,” he said. “It basically was devastating … to our bottom line throughout the remainder of 2019.”

Other industries have also warned of the fallout. The Distilled Spirits Council of the United States said last week that American whiskey exports to the EU dropped 27 percent and were down 16 percent globally in 2019, blaming retaliatory tariffs.

The tariffs on the EU are also a form of carousel retaliation, which means the goods and industries affected can change, with the Trump administration reevaluating the items on their tariff lists every 180 days. That’s hampering the ability of U.S. importers and exporters to minimize their impact.

“I don’t know what business can sort of plan for the future and make budgets and make decisions on how you make long-term investments when you’re sort of at the whim every six months of these arbitrary decisions,” Gellert said.

“It’s that uncertainty,” Marfuggi said. “If everything stayed the way it is right now, you could manage your business and move forward. Obviously, it’s still devastating because prices go up and sales would go down. But at least you would know … what you have to plan for,” he said.

Marfuggi serves as president of the Cheese Importers Association of America (CIAA), which represents the industry. His company and Gellert’s haven’t laid off any workers, but Marfuggi warned that could happen at other businesses.

“It’s going to be tough to go into your employees and say, ‘I’m really sorry but there’s no longer a job here for you,’ and they’re going to have to go home and tell their families that their job was eliminated because of a dispute between the Airbus and Boeing. It doesn’t make any sense,” Marfuggi said.

Industry groups such as the Wine and Spirits Wholesalers of America (WSWA) have been pressuring U.S. and EU trade officials to negotiate an end to the trade dispute.

A report commissioned by the group found the U.S. alcohol industry stands to lose nearly 36,000 jobs and more than $1.6 billion in wages in 2020, under the 25 percent tariffs, delivering a $5.3 billion hit to the U.S. economy.

“It’s an uncertain environment. When you look at businesses like WSWA distributors, it’s a lot of planning, a lot of logistics. There’s a lot of product that has to make it across the Atlantic. If something leaves the EU … you got to get those imports in before the next announcement,” Michael Bilello, WSWA senior vice president of communications and marketing, told The Hill.

Bilello said WSWA members haven’t reported layoffs yet but that it is a real worry after Friday’s tariff extension.

“Everyone was hopeful that this round of the carousel we’d have some sort of relief or at least be taken off,” he said.

Some administration supporters have said that the European tariffs are an opportunity for American producers to fill the void left by foreign goods, but Bilello said companies don’t have the infrastructure to do that.

“When we spoke with California wine producers … the domestic wine producers and even the champagne-method sparkling producers like Gruet out of New Mexico, they would need millions of dollars in capital investment to ramp up,” he said.

Gellert and Marfuggi expressed frustration that calls to end the tariffs are falling on deaf ears and questioned if it is because their businesses are often concentrated in blue states. Gellert has employees in 22 states, including New Jersey, California and Florida.

“The New Jersey senators are very sensitive to concerns of businesses as ours, but they’re in the wrong party, so I don’t think they have any influence. California, same thing. I don’t think the administration cares to listen to people on the Democratic side,” he said.

He said Rep. Chris Smith (R-N.J.) has been sympathetic to the cause and that Sen. Marco Rubio’s (R-Fla.) office said the senator backs free trade, but there has been no real action.

“The United States has stressed throughout this dispute that we seek a negotiated outcome,” a U.S. trade representative spokesperson said in a statement. “The EU had 15 years to resolve this problem and never made a serious effort to do so. It is time for the EU to finally abandon its massive corporate welfare to Airbus and allow it to compete on a level playing field.”

Rubio’s office pointed The Hill to a tweet from October after USTR’s announcement

“Trade with European Union is indeed unfair. But unlike Beijing, they are geopolitical allies, share our democratic values & aren’t seeking to overtake us. Let’s focus on #China first. Unfair trade with Europe is not urgent. Unfair trade with China is,” Rubio wrote.

Smith’s office did not respond to The Hill’s request for comment.

“I don’t believe my voice has gotten anywhere. We’re one person, we don’t have a big pool of lobbyists, most of my days are spent talking to customers and vendors and employees trying to drive my business,” Gellert said.

Marfuggi met with lawmakers from New Jersey and New York who said their hands were tied.

It’s just difficult when our government doesn’t listen to American companies,” Marfuggi added. “I don’t know if anybody really cares about that down in D.C.”