Imported Cheese Prices Are About to Double Due to Proposed Tariffs

Proposed tariffs currently available for public comment and expected to take effect this fall would dramatically raise prices on European foods imported to the United States, including most foreign cheeses. Many top-selling and prized styles of cheese, including Italian Parmigiano-Reggiano and Dutch Gouda, could become twice as expensive in American stores.

The far-reaching, unprecedented proposal would increase duties on hundreds of products by as much as 100 percent. The tariffs are intended to punish the European Union, but small food businesses in the U.S. are likely to be directly impacted. Specialty food retailers, already operating with thin margins and highly perishable products, are girding for potential catastrophe.

The tariffs originate in a trade dispute in the aviation industry. For years, the U.S. has sought to end EU subsidies for French aircraft manufacturer Airbus, which it believes amount to unfair competition for Boeing. In April the Trump administration announced tariffs on over 300 categories of EU goods, just one piece in a puzzle of tariffs thrown back and forth between the U.S. and its trading partners since President Trump took office.

The U.S. expanded the original list in July, which now covers an estimated 90 percent of European cheeses, according to Ron Tanner of the Specialty Food Association. Pasta, prosciutto and Scotch whiskey are included in addition to cheese and a wide range of consumer and industrial goods.

“It looks likely that these tariffs will happen,” says Tanner. “We’re most concerned about the retailers.” According to the SFA, there are more than 14,000 specialty food retailers in the country, many of which are small or medium-sized businesses. Tanner estimates that European cheeses make up a little more than half of annual cheese sales in the U.S. — about two billion dollars.

Di Bruno Bros. started in 1939 in Philadelphia and now has six locations focusing on Italian artisan food products. Cheese Buyer Hunter Fike says these tariffs “would be devastating,” affecting the majority of the top-selling cheeses at Di Bruno Bros. stores.

“We’ve never really seen a proposal this all-encompassing before,” says Fike. Di Bruno Bros. does not want or intend to double the prices of its best-selling cheeses he says, “but if our costs are doubling we might not have an option in some cases.”

The tariffs’ effect on the busy holiday season is “scary to think about,” says Fike. Di Bruno Bros.’ closest competition is Whole Foods, which is owned by Amazon and far less vulnerable to the potential tariffs.

High prices on European cheeses might give a boost to American-produced artisan cheese. Alternatively, they might hurt sales of all cheeses. If less cheese is sold, shipping and distribution costs could rise throughout the industry. And American cheesemakers who export to the EU may be affected by possible retaliatory tariffs.

David Lockwood is a partner at Neal’s Yard Dairy, a retailer and cheesemaker in the United Kingdom. Roughly a fifth of the company’s wholesale business is in the U.S., which also benefits American stores and restaurants. “Free trade is good for the consumer,” says Lockwood. “Tariffs, I just don’t think it’s good for business.”

For Lockwood, the politics are complicated and nearly impossible to predict: The U.S. tariffs are against the EU, and with Brexit, the U.K. may avoid them. However, Airbus, at the heart of the dispute, also operates in the U.K. “All we can do is understand the impact these tariffs has on our pricing and then look at how much demand will be reduced,” says Lockwood.

Ron Tanner says, “This is a dispute between two giant aircraft companies, between Boeing and Airbus. If you’re going to fight an aerospace trade war, put it on aerospace products. Don’t put it on small businesses.”

Asked why cheese is included in a package of tariffs focused on aircraft subsidies, the Office of the United States Trade Representative responded, “USTR selected products for which it considered that increased tariffs would be most likely to convince the EU to end its WTO-inconsistent subsidies,” referring to the World Trade Organization.

Through Monday, August 12, Americans can comment at regulations.gov on the additions to the list of proposed tariffs, including many Italian cheeses.