Why Trump Just Made Your Dinner More Expensive


American shoppers may not have paid close attention to a 15-year controversy involving generous subsidies that the European Union provided Airbus, its largest aircraft manufacturer.

But that long-running dispute between Europe and the United States is about to turn up at the supermarket. The Trump administration said on Wednesday that, starting Oct. 18, it will begin imposing a 25 percent tariff on a wide range of popular European food, drinks and other products.

Here’s what you need to know about the trade fight, and how it will affect your grocery list.

The United States and Europe have been arguing for more than a decade about the subsidies and other kinds of special financing that the European Union has given Airbus.

The United States argues that these subsidies allow Airbus to sell its products at unfairly low prices around the world, hurting America’s largest plane maker, Boeing. So the Americans brought a case against the Europeans at the World Trade Organization, the global body that handles trade disputes.

On Wednesday, the W.T.O. handed down the final decision in that case, giving the Trump administration the green light to impose tariffs on up to $7.5 billion of European products annually — or until the European Union ends its subsidies. Later that day, the Trump administration released a list of the goods it will start taxing.

Many trade experts argue that the United States is justified in imposing the tariffs. Unlike some of President Trump’s other trade moves — including tariffs on $360 billion worth of Chinese imports — these levies are permitted under global trade rules.

But the tariffs will still weigh heavily on some American companies and households — including consumers at the grocery store, major United States airlines, liquor importers, specialty wine shops and some manufacturers.

Some of the most beloved — and delicious — European imports are on the list, which reads like the menu for a fancy dinner party. French wine. Olives, virgin olive oil, cherries, oranges and lemons from Spain. Pork sausages and roasted coffee from Germany. Italian cheeses like pecorino, Parmesan and provolone. Gruyere and Emmenthaler from Switzerland. Stilton cheese, sweet biscuits and Scotch whiskies from Britain.

All of these items will be subject to a new 25 percent tax at the border as of Oct. 18.

A few other items beyond food will also face a tax, including aircraft, anoraks, wool suits, blankets, bed linen, axes, pneumatic tools for metal working and backhoes.

Aircraft will be subject to a 10 percent tariff, while other goods will be taxed at 25 percent. Those price increases are likely to take a toll on airlines, department stores, manufacturers and other businesses that sell imported goods.

Who actually absorbs the cost of that tariff will vary from product to product.

In some cases, European producers will be forced to foot the bill, most likely by dipping into their profits or forgoing spending on new hires and other expenses. In other cases, European companies will pass those costs on to American businesses that import and sell their products and to the Americans who buy them.

Ultimately, it’s very likely that Americans will see some price increases at the store. And that could slow spending on European wine, liquor and other goods heading into a normally busy holiday season, industry groups say.

The 25 percent tariff could raise the retail price of French wines in the United States by up to 30 percent, said Louis-Fabrice Latour, the president of the Federation of French Wine and Spirits Exporters and head of the Burgundy wine producers’ association.

Pouilly-Fuissé, a popular white Burgundy wine, could rise from an average of around $25 per bottle to over $30, with price increases starting to be felt mainly after Christmas, when existing stocks of French wines in the United States run down, Mr. Latour said.

“It’s not good news for American consumers who like our wine,” he said.

Hours after Mr. Trump announced the tariffs, said Mr. Latour, whose family has sold wine in America since the Civil War, a New York wine importer called to cancel a big order of Beaujolais nouveau red wine that was supposed to be shipped by boat for delivery in November.

The pain could get worse for American companies, whose products may face retaliation by the European Union down the line.

The World Trade Organization is considering a separate trade case that the European Union has brought against the United States for subsidizing Boeing. The W.T.O. is expected to announce that decision early next year. It’s unclear how many tariffs could be imposed as a result, but European officials have already drawn up a list of $20 billion in American products, including food and agricultural goods, that it could tax in response to that case.

Chris Swonger, the president of the Distilled Spirits Council of the United States, called the move “a devastating blow to the U.S. spirits industry.” He added, “Distillers on both sides of the Atlantic have become collateral damage in matters that are completely unrelated to our industry.”

Unsurprisingly, European companies and trade associations are deeply upset about being drawn into a trade conflict over aircraft subsidies.

“It seems ironic that in a dispute about aircraft, our sector is being hit pretty hard,” said Karen Betts, the chief executive of the Scotch Whisky Association.

But the pain that European producers will feel is part of the goal. The levies are meant to put pressure on the European Union to fix trade practices that the United States argues are deeply problematic and put American manufacturers, like Boeing, at a disadvantage.

European officials say they have tried to negotiate a solution with the United States, but the Trump administration says these offers still fall short. Under W.T.O. rules, the United States is allowed to keep the tariffs on until the two negotiate a settlement, or the W.T.O. decides that Europe has started following its rules.

That may be why the United States has chosen to focus so much on European food products. The sector is a particularly sensitive one for the European Union. American officials say the European government may respond more quickly if farmers and agricultural producers complain that they are collateral damage in a trade fight that has nothing to do with them.

Luis Planas, the Spanish agriculture minister, said on Thursday that if the trade conflict could not be mitigated, “the food sector, fundamental to citizens’ lives, will be hit.”

He said he had already reached out to the European Commission to work on “a common stance” to defend the interests of Spanish and other European farm producers.

Raphael Minder, Amie Tsang and Liz Alderman contributed reporting.


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