From Irish whiskey to Italian cheese, US tariff

Along the “last road in Ireland”, in the steep west coast of the country, the business of June O’Connell, Skellig Six18, acts as Gin and whiskey, an intensive process in time guided by wind, rain and cold temperatures that extend throughout the year in the Atlantic.

The United States was a natural target market once its first spirit was ready to sell in 2019, according to O’Connell, given its strong familiarity with Ireland and the great appetite for premium drinks. As an independent supplier, negotiations with distributors, marketing specialists and retailers took more than a year, and their first products left Kerry County in November 2023 for a launch of the USA. UU. In early 2024.

Then the political tide began to turn in the White House.

“Once it was clear how things were heading, people tried to get many products in the United States ahead of tariffs. We did some of that, but now the warehouses are full, the importers say they do not send more, and it is only the big customers who receive priority,” O’Connell told CNBC.

Since the beginning of the year, the unpredictable rates ads of President Donald Trump have been businesses of all sizes.

The European Union in particular has attracted Trump’s anger for its commercial surplus of 198 billion euros ($ 231 billion) in goods with the United States.

He argues that rates are needed to create a more balanced relationship; EU officials, however, argue that trade is even more in goods, services and investments, and have promised to increase oil and gas purchases to reduce the gap.

Last weekend, Trump announced that he plans to reach the EU with a general rate rate of 30% as of August 1, after last -minute negotiations failed to produce a framework agreement. The great uncertainty now hangs if an agreement can be reached in the next two weeks, and what details or commitments could contain.

The Trump administration has already imposed a 10% reference tax on EU imports, together with higher cars and metal rates.

The fact that the United Kingdom’s trade agreement with the US. Financial Times reported Friday that Trump is now taking a tougher line in EU negotiations and pressing with minimum 15-20%tariffs, citing people informed about conversations. CNBC has not independently confirmed the report.

EU’s food and drink trade with the US.

Even the import rate of 10% of the USA imposed in April has been a coup for the business, said O’Connell of Skell Six18, and the final impact on the price at which the consumer is much higher once the additional costs have passed the supply chain.

“In terms of prices, 30% [tariffs] It would be unsustainable. The whole situation definitely suffocates its ambition in the United States, “he added.

For Franck Choisne, president of Distillery French Distillery Combier, a 10% tariff has been almost manageable. Founded in 1834, Combier is better known for making the triple sec liquor, used in Margarita cocktails, and the United States represents about 25% of its general sales.

However, Choisne points out that the 10% rate goes on the top of the currency market market. A weaker US dollar this year has made it more expensive for the United States to import foreign goods, an additional shock absorber.

A 30% tariff, plus the effects of the exchange rate, would mean that a general rate of 45-50% is reflected in the final prices of the consumer, he said, a level that could reduce the sales of his company in the United States by half.

“We understand that President Trump wants a better balance between imports and exports, but at that level of 30%, of course, the EU will respond, trade will be affected and will be a lost situation,” he said.

American exporters of products such as Bourbon would also suffer, a factor that Choisne said it kept it optimistic that the two parties will eventually negotiate a zero Tariff Agreement for the spirits industry.

In the Lombardy field of Italy, more than half a million of huge wheels of grana cheese Padano leave the Zanetti family business supply lines every year. The company, which also manufactures Parmesano and other hard cheeses, exports more than 70% of its products, and the United States represents 15% of total turnover.

According to its president and CEO Atilio Zenetti, the volatility created by tariffs this year has been different from either before, with contradictory ads that generate a large amount of additional administrator.

“It gives a lot of uncertainty and does not allow us to organize a real strategy,” he said, bar trying to send as many products as possible before the highest rates potentially enter into force.

Zenetti said that the weakest dollar tariffs had already increased US retail prices of the company by 25%. “Of course, the increases would be directly reflected in wholesale prices and US retailers. And we fear that this will affect the volumes,” he said.

For some companies, mitigating the impact of the tariff has meant looking at new supply chain options.

Alex Altmann, partner of the accounting firm Lubbock Fine and vice president of the British Chamber of Commerce in Germany, said that some EU manufacturers were considering transferring their assembly lines to the United Kingdom to try to take advantage of their existing 10%agreement. In doing so, they must navigate the complexity of the “rules of origin” that determine the source of a product for tax purposes.

Altmann gave the example of a German kitchen appliances manufacturer with a strong demand in the United States, the company obtains most of its materials at a low price of Asia and imports them to the EU to a low rate. It is not too difficult to move the final assembly process to a factory in the United Kingdom, he said, to benefit from 10%, instead of a potential of 30%, a product rate as they enter the United States.

“We may not face these big tariff differences for a long time, but even if it charges for a few months it is quite significant money,” he added.

In other places, the big corporations are considering transferring at least some manufacturing to the German industrial giant of the United States SiemensFor example, he told CNBC that he had taken measures to locate manufacturing, and the Bosch engineering group also said he was prioritizing a local model for premises, since he seeks to expand his North America business.

However, for O’Connell of Skellig Six18, mobile production is not possible. This is because the production of “protected” articles, such as an Irish whiskey, an Italian parma ham or a French champagne, cannot be transferred to another place.

Instead, O’Connell’s is focusing on new potential markets in Asia, Africa and Latin America, but pointed out the difficulty of doing so in places without solid sales of existing whiskey. Meanwhile, Franck Choisne de Combier Distillery said that establishing itself in a new place is intensive in resources, expensive and could take years. In other words, it is not an easy solution for an decrease in US sales.

“At times like this, I just try to remember that I am in an industry that is almost 700 years old, requires patience and reminds you that things do not last forever,” O’Connell said. “You just have to continue controlling the controllable.”

– Sam Meredith of CNBC contributed to this story.