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US sanctions: Lambertz hit by punitive tariffs

October 18, 2019 at 12:17 PM , Der AUDITOR
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FRANKFURT. As CNBC has recently reported small companies in Europe are bracing for USD 7.5 billion in US tariffs. Agricultural ministers across Europe are highly concerned because many smaller food producers are hit considerably. The Frankfurter Allgemeine Zeitung for instance outlines how the German biscuit producer Lambertz is affected.

 

Tariffs of 25% become effective

The US issued the sanctions against the EU in response to the illegal subsidies for Boeing. As of 18 October agricultural imports from the EU are subject to a tariff of 25%. This tariff applies to a wide range of agricultural products including olive oil, dairy products whisky and wine.

Lambertz highlights problem of short notice introduction

As the Frankfurter Allgemeine Zeitung in Germany reports the biscuit manufacturer Lambertz is hard hit by the sanctions. As much as one quarter of the group’s reveneues are generated overseas. CEO Hermann Bühlbecker explains that the tariffs were introduced on too short a notice. Problem is that the company has already entered into contracts with partners in the US meaning that prices cannot be simply readjusted on short notice. Lambertz will most certainly have to carry the additional costs. Only next year will it be possible to raise prices. This however also entails that it will be more difficult for Lambertz biscuits to compete with US products in supermarkets. Bühlbecker is, in addition, concerned over the impact of Brexit. He reckons that the additional tariffs may cut revenues by as much as 10-20%. In 2017/2018 the group generated revenues of EUR 28 million in the US. Lambertz supplies supermarket chains such as Walmart and several discounters.

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