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EU Tariffs on Non-Durum Wheat on Hold…For Now

Posted: Apr 19 2021

In early March the U.S., and EU announced four-month suspensions in the application of retaliatory tariffs on non-durum wheat and various other products.  Non-durum U.S. wheat being imported into the EU was hit with a 25% tariff back in November.  The four-month suspension eases the burden placed on the affected industries and should allow both parties to work towards resolving the issue.

So, why exactly were tariffs placed on non-durum wheat in the first place?  The tariffs are a result of a long-running dispute at the WTO over government support for aircraft rivals Boeing and Airbus.  Last year the U.S. imposed retaliation on $7.5 billion worth of European goods based on EU subsidies to Airbus.  The U.S. imposed tariffs on aircraft, cheese, spirits and other goods.  In November of 2020 European member states approved imposing tariffs on $4 billion of U.S. goods including aircraft and agricultural goods, including non-durum wheat.  The tariff for non-durum wheat was 25%.  The EU approved the tariffs as retaliation for U.S. subsidies to Boeing.  The two sides have failed to negotiate a resolution to the long-standing dispute over aircraft subsidies.

The EU region is an important one for North Dakota produced wheat.  The region accounts for two-thirds of total durum wheat exports and is often a top 10 market for HRS wheat.  Thankfully, durum is exempt from the tariffs.  While the EU accounts for a smaller percentage of total spring wheat sales compared to durum, sales have averaged about 16 million bushels each year on a five-year average.  Sales of spring wheat for the current year to the region are down 40% from a year ago and new sales have ground to a halt.  Last year’s sales were down from the five-year average as even the threat of tariffs concerned buyers and many shifted purchases to other origins.  While the four-month delay is helpful, a lack of an extension to that window may still make buyers nervous about making U.S. purchases.  At the same time the US and UK announced similar tariff suspensions - which is also a positive development as they are typically a top buyer of spring wheat in the region.

U.S. Wheat Associates and the National Association of Wheat Growers have worked to encourage a resolution to this issue and stated, “our organizations encourage both parties to come to a long-term resolution to avoid future tariffs and supply chain disruptions.”

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