A 90-day pause to US president Donald Trump’s tariffs is no salve to the overall trading relationship, and there should be little expectation that talking will result in any positives, sector experts argue.
The scale of food and agriculture trade between the EU and US hinders any quick solutions being found, say leading economists from the global market intelligence firm ING.
America is the EU’s second largest food, drink, animal and tobacco export customer after the UK, with 12% (€25.8bn) of exports heading there.
Agri-food exports from the EU to the US have grown 15% year-on-year, with US businesses spending €1.5bn more on European food imports year-on-year from January to July last year.
EU to US food and drink exports
“Breaking it down, America received 9.5% of the EU’s food and live animal exports,” say ING’s Inga Fechner and Thijs Geijer.
Specifically, last year 27% of EU beverage exports went to the US, along with the majority of its cheese and wine too, with “72% and 78% of US imports in these products”, say Fechner and Thijs.
In contrast, Europe imported only 17% of its beverages from the US last year and 4.5% of products from the food and live animal categories. This equates to €8bn and chocks the EU’s trade surplus with the States from food and agri up to 9%.
A major factor in the deficit is the EU’s regulations that bind food and drink imports into the bloc.
“They have long been a thorn in the side… be it certification requirements for several bovine diseases or the correct wine labelling hindering US exporters by differing interpretations of EU guidance among Member States," explain Fechner and Thijs.
Will the EU import more US food?
Some of the regulations include a ban on poultry meat cleaned with chlorine, as well as hormone treated meat; and strong regulations on genetically engineered crops.
“Getting better market access for US agricultural and food products will feature on the agenda in the upcoming negotiations,” predict Fechner and Thijs.
The EU’s trade deficit with the States is expected to shrink, though it’s unlikely there will be any change to the EU’s food safety rules, as recently reconfirmed by Commission spokesperson Olof Gil.
“We believe the deficit will shrink not because of more American exports to the EU, but because of fewer European exports to the US, given that a base tariff of 10% makes EU exporters less competitive overall,” they say.
But there have been gains from the States, with corn exports to the EU recently rocketing to record levels. It’s likely this will continue as Europe’s poor corn harvest will make it reliant on imports.
