10.23.19

Trump's tariffs - working together for Catalan food

On 18 October, the Trump administration's new tariff hikes on European agri-food products will take effect. With increases of up to 25%, the new rates will have a significant direct economic impact on Catalan food and drinks: Prodeca's Department of Knowledge and Strategy estimates that the higher tariffs will add €26 Mn to Catalan transactions, by multiplying the price of affected products (almost one in three) by 25%.

The sector to be hit hardest is fine food, which is the largest Catalan exporter to the US and was worth €125 Mn in 2018 - almost half of fine food exports. Customs costs on products such as cheese, yoghurt, butter, nuts, fruit juice, and processed fruit will increase by 25%. Wine and cava will also be affected, with exports to the US worth $85 million in 2018. The new tariffs will apply to still wines, which accounted for $27 million, while sparkling wines as well as Italian, Greek, Portuguese, Polish and other competing wine-making areas will be exempt. 

 

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Opportunity to galvanise sector unity 

The United States is the eighth-largest destination market for Catalan food and drinks and with €330 Mn exported in 2018, it accounts for 3.5% of total agri-food exports. The Trump administration's selective protectionism poses a threat to the growth of the food industry in Catalonia, which has seen a 60% rise in turnover in the last five years. What effect will it have on Catalan exports? Firstly, it remains to be seen whether exporters, American importers or end consumers will bear the brunt of the new tariffs.

However, this uncertainty could also prove to be an opportunity for Catalan exporters. Less volatile than other drivers of the economy, the Catalan agri-food industry has opted to focus on quality in recent years. The US market will unarguably become less competitive in the short term, but alternative markets such as Japan, the Mercosur countries and Canada are more willing to explore bilateral agreements and to opening up trade.
 

Penalised by a remote conflict that is entirely unrelated to agri-food, the sector must now work together and coordinate a common action strategy. This entails setting up a body to defend the interests of associations, entities and stakeholders in the agri-food industry, which faces international instability. The challenges in this sector are the challenges of the Catalan economy. To address them successfully and decisively we need an association that will safeguard the industry as a whole. 

 

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