Cheese is caught in the crossfire.
The European Union claimed the United States has been illegally subsidizing the aircraft manufacturer Boeing. The United States said the E.U. has been illegally subsidizing Airbus to the detriment of companies like Boeing. The Trump administration imposed tariffs on about $7.5 billion in European Union goods. And on Oct. 18, they went into effect, prices skyrocketing on things like aircraft products, wine, olive oil and some cheeses.
Cocktail parties, holiday gatherings, gift baskets: November begins the most cheese-intensive part of the year. It is, say many food industry experts, the worst time for an additional 25 percent tariff on products that in many cases are already subject to tariffs. Parmigiano-Reggiano, Romano, Roquefort, manchego, Swiss and cheddar — the lineup of affected cheeses reads like a greatest-hits list, many of these imported cheeses without an obvious or equivalent American corollary.
Consumers lose with the tariffs because prices will go up, says Janet Fletcher, publisher of the blog Planet Cheese. And yet, because it will narrow the price differential between domestic cheeses and similar imports — American artisan cheeses, usually small and “boutique,” have tended to carry a higher price point due to lack of economies of scale — this development could make people give American cheeses a new look.
And that would only be the latest development in favor of American cheese. Last month, a blue cheese produced by Rogue Creamery in Oregon beat out 3,804 entries from 42 countries to take top honors at the 2019 World Cheese Awards in Bergamo, Italy. For the first time ever, an American cheese was named best in the world. With millennials finally putting Kraft singles out to pasture (they are purported to have “killed” individually wrapped cheese food in the way they have golf and breakfast cereal), the words “American cheese” are no longer cause for derision and eye-rolling.
“Europe has been paying attention,” Fletcher says. “They are looking for American creameries to buy. They are on the hunt, have bought a few and are looking for more.”
Fletcher says we are 35 years into an American artisanal cheese boom, with a second generation of producers taking over family creameries.
“While this is a terrible way to resolve a trade dispute that has nothing to do with cheese,” she says, “if it goes on for a long time, it will introduce Americans to some new domestic cheeses. “
Phil Marfuggi, president of the importer Ambriola as well as the Cheese Importers Association of America, says a win such as Rogue’s is good because it lets the world know that American cheese quality is improving, but that the tariffs probably will not make a dent in the trade imbalances.
“The U.S. imports $1.5 or $1.6 billion in dairy products from the E.U., and the E.U. imports about $140 million of dairy products from the U.S.,” he says.
Some of the disparity, he says, is because many European cheeses have been granted protected geographical status, so a Wisconsin cheese could not be called “Parmigiano-Reggiano” even if it were stylistically identical. Marfuggi says there may be more “havarti” produced by Danish companies in the United States than in Denmark, but that the E.U. has applied for a protected status so that any producer outside Denmark could not sell it in the E.U. under that name. As with wines and other agricultural products, European cheese producers protect their names fiercely, precluding foods from elsewhere to share nomenclature.
“And Europe also has a quota system,” Marfuggi says. “There are only so many kilos of cheese let into the European Union that are not manufactured there.”
Marfuggi, who says he’s now paying an additional $50,000 for each shipping container of European cheeses, says some cheese importers and wholesalers stockpiled European cheeses before the tariffs took effect. But this is only possible with hard cheeses with a long shelf life, like Parmesan. Expensive and more ephemeral cheeses like Roquefort, taleggio or Gorgonzola, he says, may disappear from American store shelves altogether. Which could make way for American products. But the prices of domestic cheeses, too, are on the rise.
Phil Kafarakis, president of the Specialty Food Association, explains why. Fewer E.U. cheeses means less weight on trucks, leading to higher shipping and distribution costs for domestic producers to get their cheeses to market.
“Domestic producers are going to have to pick up more of the shipping cost,” he said.
Also, he says, retailers may not increase prices of individual European cheeses by the full 25 percent tariff but choose instead to spread that 25 percent price hike across all cheese prices. Thus, domestic cheeses may inch up in price to defray the big jump in some costs to consumers.
Kafarakis says some price increases will be passed along directly to consumers, while other retailers may choose to eat the cost of the tariffs to maintain a competitive advantage.
Imported European cheese generally come in as large wheels at the wholesale level, stopping off at a cutting house where people are tasked with cutting, weighing and wrapping wedges that go on to retail stores. If the importation of European cheeses slows to a trickle, Marfuggi says as many as 20,000 jobs could be lost in the importation and processing part of the cheese business.
Cheese is the highest-volume category in specialty foods, with annual sales in excess of $4.2 billion, says Nora Weiser, executive director of the American Cheese Society. Small and medium businesses, the engine that drives the specialty food industry, may decide to invest in ramping up production but could find themselves with excess capacity and/or supply when the tariffs are lifted.
Since the World Cheese Awards were announced on Oct. 19 and 20, Rogue’s winning cheese, Rogue River Blue, has sold more than 90 wheels, 50 pounds each. Last year in the same time period, the number was 10 wheels. The blue is essentially sold out.
Tom Van Voorhees, the retail manager at Rogue Creamery Cheese Shop, says when news of the tariffs broke, Rogue petitioned against them at the American Cheese Society conference in July.
“It’s an airplane fight, not a food fight. It seems arbitrary,” he says.
That said, Van Voorhees sees the ascendancy of American farmstead cheese as inevitable, citing the 1976 wine competition termed the “Judgment of Paris,” when California wine first defeated French wine in a blind taste test.
“Beer was about 15 years behind wine, and cheese was about 20. The American palate has changed a lot. It has to do with knowing where your food comes from; that has become important to Americans,” Van Voorhees says. “Every single cheese is a story.”