Why The Prices Of Irish Butter, Scotch Whisky, Other European Goods Are Going Up
MARY LOUISE KELLY, HOST:
If you like single malt scotch, Italian ham, Spanish olive oil - yes, yes and yes - well, it sounds like we might need to stock up right now because import prices are about to rise. This is because the Trump administration is slapping new tariffs on some $7.5 billion worth of European imports. As to why - well, it's the latest move in a long-running fight between Boeing and its European rival, Airbus. NPR's Scott Horsley is here to explain all.
SCOTT HORSLEY, BYLINE: Hi, Mary Louise.
KELLY: I'm already lost. What do olive oil, scotch and cheese have to do with Boeing and Airbus jets?
HORSLEY: Not much, except that both Airbus jets and those other products come from Europe. And for about 15 years now, the United States has been accusing European countries of illegally subsidizing Airbus to the detriment of Boeing. The administration pressed that case before the World Trade Organization, which is kind of an international trade court.
And this week, the WTO gave the green light to impose these tariffs on European imports as punishment. Now, Airbus jets will be affected but so will a whole lot of other European products. To give you an idea, I visited an Italian market here in Washington and spoke with the proprietor, Ettore Rusciano.
ETTORE RUSCIANO: So as for the cheeses, we have a Parmigiano-Reggiano. We have a ricotta salata, Pecorino Romano. I have some smoked ricotta from Sardinia.
HORSLEY: Now, ricotta cheese is not on the target list, but Parmigiano-Reggiano is facing a tariff of 25% - ditto Pecorino Romano. In fact, the whole Mediterranean diet is going to take a hit here. Olive oil from Spain is on the target list but not olive oil from Italy.
HORSLEY: That's because Spain, Germany, France and the U.K. - those are the countries that are the major partners in the Airbus consortium, and they're getting hit the hardest.
KELLY: Impressive Italian pronunciation there, Scott, by the way.
KELLY: When do these new tariffs take effect?
HORSLEY: They're set to go into effect two weeks from tomorrow, so you do have a little bit of time to fill your pantry before that. Now, Mary Louise, as interesting as what is on the tariff list is what's not on the list. Initially, the administration was going to add tariffs to Airbus parts imported from Europe. And that would have been a big concern for the Airbus assembly plant down in Mobile, Ala., according to Bill Sisson. He's president of the Mobile Area Chamber of Commerce.
BILL SISSON: We are always concerned about tariffs. This is a very international economy in Mobile. We're a port city. We have always looked outward to build our economy. And so whenever there's a trade war, it certainly has an effect on our local manufacturing.
HORSLEY: In the end, the administration decided not to target Airbus parts, only Finnish jets from Europe. They will be facing a tariff of 10%. And that was a big relief to the economic development team in Alabama and Mobile's congressman, Bradley Byrne, who praised the White House decision.
KELLY: Now, with some of the administration's previous tariffs, we have, of course, seen the other countries hitting back quite quickly. Is that likely to happen this time?
HORSLEY: It's not clear. In announcing these tariffs, the U.S. trade representative said the EU is not allowed to retaliate, and that's true as far as it goes. But just as the United States has been challenging Europe over illegal subsidies for Airbus, the Europeans have accused the United States of illegal subsidies for Boeing. They're pressing their own case at the WTO. That's running about six months behind the American case.
When it's decided sometime next year, it's entirely possible the European governments will level tariffs on American goods, including those Boeing jets. And aviation analyst Scott Hamilton of the Leeham Company says that could hamper Boeing's efforts to recover from the worldwide grounding of its 737 Max planes.
SCOTT HAMILTON: I would think that Boeing would not want to have tariffs going onto those airplanes right now. They're just under so much financial pressure that that's the last headache that they need. But Boeing has a decades-long history of pursuing trade complaints, whether that makes sense to or not.
HORSLEY: And if all that's not enough, Mary Louise, keep in mind the administration is still considering a tariff on imported cars from Europe. That would make the stakes in this food fight a whole lot bigger.
KELLY: NPR's Scott Horsley.
Thank you, Scott.
HORSLEY: You're welcome.
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