Escalating U.S. tariffs on imports from Italy threaten to unravel the intricate trade networks that make Italian American cuisine possible, and could slash transport, retail, and restaurant jobs across the United States, food purveyors are warning.
“Every dollar the tariffs go up” pushes more U.S. stores and consumers towards “fake prosciutto and fake Parmesan” from other countries as a cheap substitute for la buona cucina, Riccardo Longo, owner of Gran Caffè L’Aquila on Chestnut Street in Center City, said Thursday at a gathering he hosted of competitors and lobbyists who seek to stave off the threatened taxes.
It’s not just that some Americans won’t pay more for the best: It’s also that small-town Italian producers are feeling forced by the uncertainty to seek new markets in Asia and the Middle East, Longo and other importers said.
Food makers in Italy and importers in the U.S. depend on a network of relationships built up by a century of Italian American immigration, tourism, nostalgia and food education. The threatened 25% tariffs and the resulting drop in profit margins and sales would shift supply lines and threaten to disrupt or end that long heritage, said restaurant supplier Bill DiGiacomo of DiGiacomo Bros. Specialty Foods Co. in Conshohocken.
The owners said selected imported foods have already been slapped with tariffs — including a big seller, Parmigiano-Reggiano cheese — but they have so far been successful at persuading the government to hold back on slapping taxes on a wider range of goods.
But in October, the World Trade Organization ruled the U.S. would be justified if it slapped up to $7.5 billion in “retaliatory” tariffs against European Union countries, including Italy, as punishment for aggressive subsidies to jet airplane maker Airbus, which competes with America’s Boeing. So now the importers fear their margins will collapse.
Longo said big food import companies have been stuffing their warehouses before the tariffs hit, but small businesses don’t have that option. If a threatened increase in tariffs, from the current 25 percent for many items to as much as 100 percent, “many Italian specialty importers will surely go out of business."
He elaborated later: "To this point, we have absorbed the increases, and not passed them on to our customers. The choice that Italian restaurants will have to make is to either raise their prices or utilize what we as Italians call ‘ fake food’ " -- which last, he added, "will not be an option for our restaurant.
“Either way, the consumer will be negatively effected with either a higher price tag or an inferior product. We will always use the authentic Italian products that are part of our heritage. and will have to work on a costing and portion strategy to deal with potential increased costs,” Longo concluded.
“Italian culture is all about food, wine, and family,” said Emilio Mignucci, third-generation operator of Di Bruno Bros. He said the business rests on tight personal relationships with families like the cheesemaking Auricchios of Cremona, olive-oil makers in the hills around Lucca, and the crostini bakers of Abruzzo.
“But they don’t have to ship to Di Bruno’s,” he added. If tariffs drive up prices and U.S. orders drop, pinched sellers will find markets among the rapidly growing economies of Asia and elsewhere, leaving Americans behind.
“My grandfather said, ‘All you need to do is sell the best you can find, and people will get it,’” Mignucci said. “Our prosciutto is $5 more than the guy down the street. A box of crostini already costs $20. I buy them by the shipping-container load. But $5 a bag [in new tariffs] is not sustainable.”
These small-town Italian exporters “have nothing to do with the Airbus,” added former U.S. Rep. Lou Barletta (R., Pa.), a Trump supporter who was at the gathering and is chairman of the 450-member American Italian Food Coalition, which is lobbying to stop the tariffs.
“I support the president when he stands up for American jobs,” said Barletta, who is also known for his criticism of past immigration policies. But the Italian tariffs are more likely to hurt U.S. employment, which should give the administration pause, he added.
Small Italian companies that are used to relying on the American market may be able to sell elsewhere, but the dislocation in the meantime will cost jobs in both countries, said Amato Berardi, a Philadelphian who formerly held one of the seats in the Italian Parliament reserved for American expatriates.
The threat of tariffs unsettles many delicate trade relationships, warned Salvatore D’Angelo, owner of D’Angelo’s Ristorante Italiano in South Philadelphia. He blames the threat of new tariffs for the increased difficulty he’s had finding some Italian wine in recent foreign shipments to Pennsylvania state stores: The suppliers are sending product elsewhere, he suspects.
Philip P. Jaurigue, CEO of Sabre Systems Inc. in Warrington, whose clients include Boeing, also attended the presentation and said many companies large and small are working to limit the impact of retaliatory tariffs.
But tariffs can damage even businesses they don’t affect directly, D’Angelo warned.
As a young man, D’Angelo said, he was a marble importer. He watched the once-robust Italian marble imports crumble because of a U.S.-Mexico dispute over marble prices. Supply uncertainty drove buyers out of the market, he said, even those not directly touched by the dispute.
D’Angelo worries that’s happening now to the food business. He blamed government interference in natural markets for squeezing family businesses, caught in international politics.
Reporter’s Note: The story generated a number of direct responses from readers. My favorite, from Robert Capretto:
“Don’t believe it. We Italians know fake from real. If they tick us off, we can make our own.”