US tariffs cause Spanish olive oil exports to plummet

Published 2021년 2월 24일

According to the Asaja Farmers Association, Spanish olive oil exports to the United States have decreased by 81% in the 2020/21 season compared to the previous year due to the 25% duties placed by the United States government. This was as the US concluded that Spanish olive oil was priced too cheaply and benefited from unfair subsidies. Spanish olive oil exporters have experienced losses amounting to several hundred thousand euros. The tariff placed on Spanish olive oil has also led to Spain shifting to alternative markets, such as Tunisia and Portugal, with imports from those regions increasing in 2020 by seven and 8.5 times, respectively.

The US imposed retaliatory tariffs following a ruling by the World Trade Organization (WTO) in 2019. An investigation conducted by the WTO found that Airbus had been illegally subsidized by four European Union members, including Spain, giving the aircraft manufacturer an unfair advantage over Boeing, its American rival. This investigation resulted in implementing a 25% tariff on imports of packaged Spanish virgin and non-virgin olive oils in all of its fractions in containers of less than 18 kilograms (39.7 lbs) and pitted and unpitted green olives from Spain and France.

Impact of the tariffs

The Association of Young Farmers (Asaja) stated that bottled olive oil export to the US dropped by 81 percent in 2020/21, compared with 2019/20, decreasing by 39 percent during the first half of 2020. As a result, the association fears that the continued tariffs will continue to threaten its status as the primary source of U.S. olive oil imports. Andalusia, a southern Spanish community, accounting for 80% of Spain’s olive oil production, is the area most affected by the tariffs. The impact of the tariffs has added to the region’s economic hardships following the 2008 financial crisis, where unemployment rates remain high at 23%.

Way forward

(US President Joe Biden) Source: Efeagro / EPA / Shawn Thew

Following a review in February 2021, the current President of the United States, Joe Biden, has decided to uphold the tariffs on exports of Spanish foods such as bottled olive oil, green olives, wine, and fresh cheeses. Biden has stated that he did not see the necessity of modifying or amending these tariffs. In response to this, the Spanish Ministry of Agriculture intends to negotiate the elimination of the taxes with the US administration before August 2021, the next review, as the tariffs have been reviewed every 6 months since 2019.

Spain is Europe’s largest olive oil producer and is forecast to produce a quantity of 1.5 million tons of olive oil by the end of 2021, leading to excess supply in the domestic market. This increased supply may reduce local prices, leading to high production losses 2020/21. The Spanish Ministry of Agriculture, Food and Fisheries has also requested the E.U. work with the Spanish government to protect the trading bloc’s agricultural sector from the impacts of the U.S. tariffs.

Spanish Olive Oil Production