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U.S. importers stockpile Parmigiano, Provolone as tariffs on EU cheeses loom

By Andrea Shalal and Aleksandra Michalska

Parmesan cheese is seen packaged within the warehouse at Ambriola Co Inc, a unit of Gennaro Auricchio SpA, one in every of Italy’s largest cheese producers, in West Caldwell, New Jersey, U.S., October 4, 2019. REUTERS/Shannon Stapleton

WASHINGTON/WEST CALDWELL, New Jersey (Reuters) – Ambriola Co Inc’s mammoth warehouse in West Caldwell, New Jersey, is crammed filled with packing containers and wheels of more durable cheeses similar to Parmigiano Reggiano, Pecorino Romano and Grana Padano – and extra is coming, tons extra.

Phil Marfuggi, president and chief government officer of Ambriola, a unit of Auricchio SpA, one in every of Italy’s largest cheese producers, is among the many many importers and store homeowners throughout the nation who’re scrambling to stockpile European cheeses earlier than new U.S. tariffs kick in on Oct. 18 in efforts to defend customers from worth hikes.

The Trump administration on Wednesday slapped 25% tariffs on cheese and different European Union merchandise starting from whisky to woolens, in retaliation for EU subsidies on giant plane. Either side say they’re open to negotiations, however commerce consultants see little likelihood of averting the duties – at the least within the quick run.

Importers started ordering tens of millions of {dollars} of additional wheels of Parmigiano Reggiano and different more durable cheeses after the U.S. Commerce Consultant’s workplace in July added cheese to its listing of EU merchandise doubtlessly going through tariffs because of the dispute over plane subsidies.

“When that listing got here out, that’s after I … began bringing in lots of extra containers of cheese of Reggiano, Provolone,” stated Marfuggi, who has one other 21 delivery containers filled with cheese en path to be added to the stockpile within the firm’s warehouse in Caldwell, which sits about 15 miles west of Manhattan.

Marfuggi stated he ordered an additional $15 million of cheeses that may very well be saved for over a 12 months to make sure satisfactory provides for current prospects and shield pricing via the tip of the 12 months.

“I’ve been build up stock … as a result of we’ve got a goal on our backs,” he stated.

The brand new duties may slash U.S. imports of EU cheeses valued at $1.5 billion a 12 months by 30% and jack up costs throughout the nation, stated Marfuggi, who additionally serves as president of the Cheese Importers Affiliation of America.

Some higher-priced objects will merely disappear from shops, he predicted, like Moliterno al Tartufo, an aged Italian cheese with an intense truffle taste. Even Parmigiano Reggiano may very well be in danger if costs rose to $30 a pound, he stated.

“There are going to be some objects … that the supermarkets are simply not going to deal with anymore. It’ll be worth prohibitive for that,” he stated.

The tariffs will hit shopper costs and finally jobs throughout the US, stated Ralph Hoffman, government vice chairman of Schuman Cheese, one of many largest importers of exhausting Italian cheeses.

Over 20,000 U.S. retail shops starting from Costco Wholesale Corp (COST.O) to Wegmans Meals Markets promote EU cheeses. These cheeses generate some $3.5 billion of income for U.S. firms, supporting some 20,000 jobs, together with patrons, deli clerks, truck drivers and warehouse employees, Hoffman stated. He famous that the brand new tariffs come on prime of current duties of round 15%.

Specialty grocer The Recent Market expects the tariffs to have an effect on about 35% of the 200 cheeses it carries at its 160 shops.

“We’re ready to see how the importers are going to move the associated fee alongside,” stated Andrew Harvell, who heads the corporate’s cheese division. “All the things’s nonetheless up within the air,” he stated, including that Recent Market had pre-ordered sufficient cheese to final via the vacation season, however may have to boost costs quickly thereafter.

Mike Bowers, the third-generation proprietor of a specialty cheese store at Washington’s storied Japanese Market, stated he started hoarding further wheels of exhausting cheeses – some weighing as a lot as 80 kilos – in July when USTR first introduced it may impose tariffs on cheese and different agricultural items.

His glass cheese counters, coolers and enormous walk-in fridge are stuffed to overflowing, however Bowers stated his provides won’t final via the vacation season. He stated he must move on the price of the tariffs.

“I’m a small man. I can’t purchase a $100 cheese and promote it for $50 and count on to remain in enterprise too lengthy,” he stated.

“I’ve a stockpile of cheese to be sure that I’m capable of preserve stock and preserve gross sales at my counter,” Bowers stated. “After which as time goes on, we’ll must see.”

He stated the standard of U.S. cheeses was bettering, offering good alternate options for some in style European cheeses, however he must discover methods to be extra “progressive” sooner or later.

He additionally has a stable choice available of Swiss cheeses that aren’t topic to EU tariffs, together with a Gruyere-style L’Etivaz, made in copper pots in line with historical custom.

Marfuggi stated it was a reduction that USTR opted for 25% tariffs as an alternative of the 100% charge initially proposed, however he worries that patrons would swap to home or different international provides if the tariffs stayed in place a very long time.

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“If that occurs, you’re going to lose a substantial quantity of shopper base, and it’s exhausting to win that again,” he stated.

And cheese hoarding can’t resolve all of the anticipated shortages, he warned. Many softer cheeses can’t be saved for almost as lengthy, so costs of these objects will seemingly rise rapidly.

“If you happen to’re a Gorgonzola lover, you’re positively out of luck,” Marfuggi stated.

Reporting by Andrea Shalal and Aleksandra Michalska; Extra reporting by Richa Naidu; Modifying by Heather Timmons and Leslie Adler

Our Requirements:The Thomson Reuters Belief Ideas.

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