This piece in yesterday's Chicago Tribune describes how the U.S. has slapped a punitive "100-percent import duty that will effectively double the price of [Italian mineral water] such as San Pellegrino, Acqua Panna and Sole". "The double-duty is part of a U.S. payback in response to the European Union's ban on U.S. beef containing hormones, and the United States has slapped tariffs on dozens of EU imports, not just Italian mineral water... But Italian water is a higher-visibility, higher-volume consumer product compared to the chestnuts, frozen meats and even Roquefort cheese that have been targeted previously." The Tribune came upon the story because "More than 60 Italian restaurants in Chicago are joining in a protest against [the] punitive tariff".
This sounds a lot like an old fashioned elementary school playground squabble. Punitive tariff wars have been going on for centuries and always damage markets -- direct producers, wholesalers, retailers and shippers. It's not even an effective retaliation against the EU as Germany and France are the next largest producers and will pick up the slack. Even more absurd is how unlikely this action is to be effective to save the losses incurred by U.S. Beef Producers given their supply chain time line.
When President Obama recently visited Italy, he campaigned against this sort of tariff war in his public statements. If the U.S. and EU can't do better than this, we will all be in for a much longer economic recovery.
- William Busch, Spend Matters Columnist