The European Union’s recent retaliatory tariffs on agricultural goods stand to affect Virginia agriculture, but Virginia Farm Bureau is optimistic the Biden administration can work toward resolving trade tensions.
The EU recently announced it would impose a 25% tariff on several farm commodities and foods. This was in response to the Boeing-Airbus case at the World Trade Organization, a long-standing dispute between the U.S. and EU over government subsidies for civil aircraft production.
This is the latest move in the case dating back to 2006, and many Virginia products are on the list of agricultural goods targeted by the tariff, including tobacco, cotton, peanuts, wheat, seafood and grapes.
“As is frequently the case, U.S. food and agriculture are being dragged into a dispute that they had nothing to do with,” said Ben Rowe, national affairs coordinator for Virginia Farm Bureau Federation. “By consistently running a surplus, agriculture is a routine bright spot in the U.S. balance of trade. However, this also makes it first on the list in retaliatory tariffs, regardless of the type of goods and services directly related to the dispute.”
According to the Virginia Department of Agriculture and Consumer Services, Virginia is the second-largest tobacco exporter in the U.S., accounting for 23% of all tobacco exports to the EU. In 2020, Virginia exported more than $31 million in leaf tobacco to the EU, a 53% increase over 2019.
“The retaliatory tariffs that are to be imposed will cause this growth to diminish and will negatively affect Virginia tobacco producers and the rural economies they support,” explained Michael Wallace, VDACS director of communications.
In addition, the tariffs will likely cause a decline in peanut and scallop exports, as the commonwealth is the fourth-largest supplier of peanuts and second-largest supplier of scallops to the EU.
“Sauces, mixed condiments and seasonings is another category of Virginia products that have experienced recent growth. However, they will be negatively affected by these retaliatory tariffs,” Wallace said.
Rowe added that farmers, agribusinesses and VDACS work hard to diversify export markets and partners to ensure there are multiple export opportunities and destinations for Virginia products.
“It takes years to build relationships with importers, and disruptions like this can undo years of hard work and trust,” he said.
The dispute now has spanned three presidential administrations, and both Rowe and Wallace agree that resolving ongoing trade tensions will benefit Virginia and the global economy.
“Recently the U.S. and EU have both indicated their willingness to reach a negotiated settlement to the underlying dispute,” Rowe explained. “Now is the time to look at this with fresh eyes and negotiate a settlement that will help both countries recover from economic challenges and normalize trade.”
