Tariffs at holidays giving food sellers a pricing bellyache

Earlier this month, the Trump administration slapped 25% tariffs on $7.5 billion worth of European goods, including many popular cheeses and other products, like French wine and Spanish olive oil. With the holidays looming, Bay Area importers and distributors are scrambling to assess the potential impact of the new tariffs.

But retailers, especially small-business owners, like Fred Zanotto of Zanotto Market, know the reality.

“If it’s a 25% tariff, we’re going to increase our prices by 25%,” said Zanotto, who owns four stores and a deli in the San Jose, Calif., area. “It’s going to be inconvenient for us and our consumers. But we do what we have to do.”

The tariffs, which went into effect Oct. 18, are in retaliation for illegal subsidies that the EU provided to Airbus, the European planemaker. They are intended to help the United States regain some of the losses that a U.S. plane-maker, Boeing, sustained because of these trade practices.

“It’s makes no sense,” said Sara Baer-Sinnott, president of Old Ways, a Boston nonprofit food organization that advocates for traditional foods, including cheese. “It’s our government trying to balance trade with Europe, but it doesn’t go together, airplanes with foods people love.”

Nevertheless, just in time for holiday entertaining, cheese lovers will likely face sticker shock at the cheese counter for their manchego and Parmigiano-Reggiano — a hard cheese that already fetches $17 to $30 per pound, depending on age — as everyone in the supply chain scrambles to offset costs in the busy months ahead.

“We’re in a holding pattern,” said Amanda Parker,

managing partner of Tomales Bay Foods, a California distributor that imports a few items, including Parmigiano-Reggiano. “Most of our partners are holding tight with the holidays coming up and offering to split the difference on some of their products, because $40 a pound for Parmigiano is not tenable. But the timing couldn’t be worse.”

Even deciphering which cheeses are victims of the levies and which escaped the government’s list, which is loaded with technical jargon — “Swiss or Emmentaler cheese with eye formation, nesoi, not subject to gen. note 15 or to add. US note 25 to Ch. 4” — is difficult. Provolone is on the list. French

blues are not, but blue-veined cheeses from Italy, Spain and the U.K. are.

Cheese expert and cookbook author Janet Fletcher called it “cheese gerrymandering, with lines drawn between the taxed and the untaxed for no legitimate reason,” on her blog,

If the products subject to the tariff were chosen intentionally to put pressure on the EU, then in theory, you would target products that will have a big economic impact, Fletcher said.

“But the fact that many important EU cheeses, like French brie, are not on the list shows that lobbyists were all over this,” she said in an email. “The industries and companies with effective lobbyists got their products exempted. At least that’s how it looks to me.”

As confusing as the list

appears, there is some logic. The tariffs take obvious aim at European products that have cultural status — like Italian pecorino or Scotch whisky — and fetch premium prices. But tariffs are also meant to protect American producers by encouraging the purchase of domestic goods, said Richard Armanino, director of sales for Italfoods, a Bay Area importer in south San Francisco.

“Prosciutto (cured ham) is not on the list because U.S. producers couldn’t fill that void, but prosciutto cotto (cooked ham) is on the list because we make enough to sustain the demand here,” he explains. Still, the holiday timing is going to hurt. To offset costs, Armanino is trimming marketing and tightening some producers’ cuts to support a low price.

“The goal,” he said, “is to

find ways to minimize the end impact for chefs, restaurant owners, retailers and ultimately consumers.”

For Alma Alvalos, the cheese buyer at Market Hall’s Cheese Counter in Oakland, Calif., said it’s too soon to tell how the tariffs will play out, but she’s prepared. Alvalos doubled her November orders at the pretariff price, and when those shipments arrive she will stockpile her customers’ favorite Goudas and hard Italian cheeses in Market Halls’ refrigerators.

“I have enough cheese for this month and next month, but December is going to be different,” she said. “I’ll just have to work with my distributors and importers because I want my customers to be comfortable with the pricing. That’s the most important thing.”