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    Sunday, June 23, 2024

    More taxes have been proposed on EU imports. What does that mean for Connecticut?

    Non-military helicopters, cargo transports and aluminum wings from France, Germany, Spain and the United Kingdom. Sparkling wine, whiskies and grape brandy from these and other European countries. Roquefort and gouda cheeses. Sweaters, yarn, essential oils, glassware, table knives, wall clocks and bicycle parts.

    These are just some of the items the Office of the U.S. Trade Representative, or USTR, is proposing for additional taxes on goods imported from certain European Union countries, in addition to the 25 percent tariffs that went into effect Oct. 18.

    Now, the office is considering imposing duties of up to 100 percent on certain items, which can be viewed under Annex II at bit.ly/eutariffs.

    The tariffs stem from the Large Civil Aircraft dispute, in which the World Trade Organization ruled that aid to Airbus airliners breached agreements in a manner detrimental to the U.S.

    USTR is inviting people to comment on whether products should remain on its list or be removed, and whether the rate should be increased up to 100 percent. The office is accepting comments until Jan. 13; more than 4,800 had been posted as of Tuesday evening.

    Some Connecticut specialty food companies and manufacturers shared their displeasure through the comments, while others in the wine and spirits industry voiced their concerns to The Day.

    Some are in a bit of a Catch-22 when it comes to purchasing decisions: Do they stock up on European imports now in case the tariffs go up to 100 percent, or do they hold off in case the aircraft dispute is resolved and the tariffs go down to zero?

    "It's hard, especially for small businesses, to figure out what to do," said Ben Suhr, vice president of Grand Wine & Spirits, "because we don't know whether the tariff is staying or if it's just a bargaining position, and it's hard to make plans, because you're not talking about inexpensive items."

    Grand Wine & Spirits has five stores across Groton, Waterford, Mystic and Old Lyme. Like many importers, Suhr makes the argument that certain European products just aren't replaceable by American ones.

    "People who drink scotch, they drink scotch," Suhr said. "You're not going to switch them over to bourbon just because there's no tariff on it."

    Suhr said he has especially seen price increases on scotch and Bailey's Irish Cream. He also is seeing an impact on the Please Say Cheese shop in the Waterford store.

    Grand Wine & Spirits has spent a lot of time expanding its French wine portfolio in the past few years, and Suhr said it's hard to turn a customer onto a new product and then have to raise the price.

    The wine tariffs currently in place apply only to wines with under 14 percent alcohol content, but the proposed additional tariffs would include wines above that.

    Gia Pascarelli, senior portfolio manager for the North Haven-based distributor Slocum & Sons, said Spanish reds tend to be over 14 percent because of the warm climate, and that the current tariffs probably don't apply to 80-90 percent of them.

    Only France, Germany, Spain and the U.K. were included in the current tariffs on wine, but Pascarelli is concerned about the inclusion of Italy and Austria in the new proposal.

    "If anybody thinks that France is going to pay, I mean, they're just mistaken," Pascarelli said. "The only person who's going to pay is the consumer, and so when your $10 bottle of pinot grigio is now $20, most of what you're paying is not going to the winery or the distributor or anybody along the chain; it's going to the government."

    At Forty Thieves, an Irish bar in Groton, owner Diarm Hanafin said a 100 percent tariff on Irish whiskeys would be "devastating." He said Forty Thieves has the largest selection of Irish whiskeys in Connecticut, and noted that the tariff would impact anything coming out of the Bushmills distillery in Ireland.

    Hanafin said the top sellers at his bar are Guinness beer, Jameson Irish Whiskey and Tito's vodka. The current tariffs are only on single-malt Irish whiskeys and Scotch whiskies, and therefore do not include Jameson, but the new proposal is for Irish whiskeys and Scotch whiskies in general.

    Hanafin thinks that if the price of Jameson increased dramatically, people would just switch to something else, probably Jack Daniel's.

    The European Union already put tariffs on American whiskey as retaliation for the 2018 tariffs the U.S. put on European steel and aluminum, and while the tariffs have cost Jack Daniel's parent company Brown-Forman $125 million per year, the company hasn't raised prices in Europe or the U.S., Food & Wine reported.

    'Like trying to bang in nails with sledgehammers'

    Connecticut Business & Industry Association economic adviser Pete Gioia said that unlike with the Chinese tariffs, he hasn't heard a lot from businesses about the EU ones.

    "Hopefully we'll get through this and drop all this foolish stuff," Gioia said of the tariffs. "It's not a good way to do business, and I'm not sure it has that much effect on the government."

    He added, "Trying to deal with trade disputes with tariffs is like trying to bang in nails with sledgehammers. You're going to have unexpected consequences."

    A review of a few hundred of the most recent comments submitted on Regulations.gov show only opposition to the proposed tariffs, a sentiment shared by Connecticut companies whose submissions go as far back as last spring. Some items on the newer list originally were proposed in April but were not included in the tariffs that went into effect in October.

    The firm OFW Law submitted a comment on behalf of Norseland Inc., a Darien-based company that is the sole importer of Garcia Baquero Spanish sheep's milk cheeses and Old Amsterdam aged gouda cheese. Norseland feels the tariffs should be imposed in the same sector as the alleged trade violation, not on unrelated food and agricultural products.

    The impacted products extend beyond the edible.

    Mike Rodgers, president and CEO of the Meriden-based Miller Co., submitted a comment objecting to the inclusion of copper-based alloys in the list of tariffs. He noted that such alloys are commonly used in defense, automotive and fire suppression systems, and in cymbals.

    Rodgers wrote that there are no suitable replacements, and switching to a new process would require the refitting of old plants or re-establishment of new ones.

    The Waterbury-based superconductor manufacturer Luvata objects to the proposed inclusion of refined copper, bars and rods, President Antti Kilpinen wrote in a comment. Kilpinen said the bars and rods it imports "are not produced in the United States or elsewhere in quantities or to the specifications required by Luvata."

    Many motorcyclists submitted an identical form letter opposing the tariffs, since the proposed list includes motorcycles and motorcycle parts from 28 European countries.

    Separate from the aircraft carrier dispute tariffs, the U.S. has proposed putting tariffs on $2.4 billion worth of French cheese, wine and handbags due to a French tax that hit American technology companies. The New York Times reported that President Donald Trump said in December, "We have a minor dispute. I think we will probably be able to work it out."

    On Monday, France's finance minister vowed to retaliate if the U.S. goes through with that plan.


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