US trade tariffs will be a ‘hard landing’ for some

The impact of proposed US trade tariffs on EU agricultural products differs per product and per country but will be a ‘hard landing’ for some sectors, according to RaboResearch, part of The Netherlands-based Rabobank.

“Wine, cheese, butter and olive oil will be impacted more than pork, fruit, and vegetables,” said Stefan van Merrienboer, RaboResearch Analyst – Farming, Grains & Oilseeds, commenting on the WTO’s ruling in favour of the US over illegal government support to Airbus, a decision which allowed the US to impose tariffs on USD 7.5bn worth of products from the EU-28.

“The tariffs proposed are not a broad list focused on the whole European agricultural sector, rather they target specific countries and product categories,” he said. “Besides airplanes and industrial goods, the list contains 119 agricultural products, ranging from French wine to Italian cheeses, that will be subject to a 25% tariff.”

Looking beyond the immediate impact of the US action, however, he suggested that the US/EU dispute was likely to remain very different to the US/China issue.

“Although there has been some trade tension between the US and EU in the last couple of months, for now we do not expect a fully-fledged trade war between the EU and the US,” he said.

“For a start, the tensions between the US and the EU are of a completely different nature than in the US-China trade war. The US-China trade war is not just about the large deficit that China runs with the US, it is rather a geopolitical power struggle.

“The Trump Administration also understands that the US economy will be much worse off if it starts a trade war against Europe. Finally, President Trump may probably not want to upset financial markets much further.”

Access Rabobank report



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