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2020 Was an Awful Year for Restaurants, But Reversing Tariffs Could Help

Words by Leon Kaye
Tariffs

More than 110,000 U.S. restaurants closed over the past year — and as shutdowns resumed, well over 10,000 of them shuttered in the last three months of 2020 alone. Across the country, the heartbreak continues. Many of these were beloved local institutions, and some had made investments in tents and other equipment to adapt to the new reality of doing business during a pandemic, ultimately to close their doors anyway.

And as many restaurants and bars were shut down to counter the COVID-19 surge, few policies were put in place to help small business owners and their employees get through this crisis. For owners, the only flaw in their business decisions was a failure to do the impossible: develop a completely pandemic-proof plan.

Nevertheless, even though this “dark winter” makes us wonder if there’s any light at the end of this tunnel, leading restaurateurs say one signature can give the restaurant industry a much-needed lift.

The (partial) solution? Start with the 25 percent tariffs on many European food and alcohol products, which the Donald Trump administration imposed months before the pandemic in October of 2019.

At first glance, those products may seem like a small part of U.S. restaurant and bar menus. But consider the list of products, which includes cheese, frozen fruit, meats such as ham, olives, whisky and wine. Then add the fact that restaurants using these products must make the stark choice to either pass on the costs to their customers or simply absorb it themselves — the latter of which is non-starter in a sector with very thin profit margins.

“Frustratingly, restaurants have been caught in the crossfire of a much larger trade war. The goal of the tariffs was to hit back at the European Union in a long-running feud between U.S. aircraft giant Boeing and its E.U.-based rival Airbus,” restauranteurs Kwame Onwuachi and Alice Waters argued in a recent Washington Post op-ed. “Spanish wine may have nothing to do with Boeing, but the Trump administration thought it could bring Europe to its knees over aircraft subsidies by taxing food exports.”

Any appeals the restaurant industry has made to the White House have fallen on deaf ears. In fact, the outgoing administration is lengthening the list of products subject to these tariffs as part of its long dispute with the European Union over subsidies for its aviation industry.

Such a move may score political points in some circles, but it’s a gut punch to small businesses on both sides of the pond. One business association pointed out how a 25 percent increase in cost can hurt countless small businesses, while Europe’s aircraft sector — the core of this ongoing spit-spat — was slapped with only a 10 percent tariff. Another group suggested at least 13,000 jobs disappeared as the tariffs were first imposed, hardly a small number at a time when jobs are scarce.

The effects not only hit restaurants and their employees. Yet another restaurateur noted that smaller food distribution companies could suffer as small, family-owned restaurants would not benefit from purchasing from larger suppliers that only offer discounted prices to large restaurant chains.

It will take a long time before the 2 million-plus jobs that the restaurant sector lost during the past year will ever come back. Nevertheless, Onwuachi and Waters say that, with a “stroke of a pen,” President-elect Joe Biden could reverse those tariffs and give restaurants and bars a much-needed break.

One coalition is keen on amplifying that call to action. The Coalition to Stop Restaurant Tariffs, which just emerged last month, is urging the incoming White House to nix those tariffs soon — and keep small businesses out of the line of fire in what has been a 16-year-long tussle between the U.S. and European Union.

Image credit: Jez Timms/Unsplash

Leon Kaye headshotLeon Kaye

Leon Kaye has written for TriplePundit since 2010, and became its Executive Editor in 2018. He's based in Fresno, CA, from where he happily explores California’s stellar Central Coast and the national parks in the Sierra Nevadas. He's worked an lived in South Korea, the United Arab Emirates and Uruguay, and has traveled to over 70 countries. He's an alum of the University of Maryland, Baltimore County and the University of Southern California.

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