The imposition of US tariffs on European olive oil has significant implications for global trade, consumer markets, and producing regions. These tariffs disrupt established trade patterns, increase prices for US consumers, and may encourage limited growth in US domestic production. Southern European economies (responsible for 80% of olive oil US imports in 2024), particularly Andalusia in Spain, are likely to experience economic pressure from these measures.
Historical Context and Current Tariff Structure
The US-EU trade relationship has been marked by disputes, including tariffs on European olive oil. In 2021, President Biden suspended a 25% tariff on Spanish bottled olive oil (in containers under 18kg) that had been implemented under the Trump administration as collateral damage due to disputes between the US and EU. However, new tariffs were announced almost immediately after Trump regained the presidency. Spanish olive oil now faces a 20% tariff, compared to 10% for other non-EU countries, and Spanish ripe olives will face a 50% tariff starting April 9, 2025.
However, these tariffs were paused on the same day they were set to take effect, with a 90-day suspension period introduced to allow space for further nagotiations. This pause raises hopes that the 20% tariff on European products could be reduced to 10%, aligning it with rates applied to non-EU countries.
Differential Impact on Bulk and Bottled Products
The tariff structure differentiates between bulk and bottled olive oil imports. Bottled Spanish olive oil faces higher tariffs than bulk shipments, incentivizing Spanish exporters to shift towards bulk exports to mitigate costs. Higher-value packaged products are disproportionately impacted compared to industrial-grade bulk oils.
Economic Impact on European Producers
The economic consequences for European olive oil producers are substantial. Spain's olive oil industry, valued at €6 billion and representing 12% of Spanish agri-food exports, faces a significant competitive disadvantage with a 20% tariff compared to other producing countries that only face 10%, like Turkey and Morocco. In addition, Spanish table olives have already suffered under a 30% tariff since 2018, resulting in over €280 million in losses, and now face an even steeper 50% tariff on ripe olives starting April 9, 2025. In general, Spain exports approximately 180,000 tonnes of olive oil directly to the US, with another 180,000 tonnes shipped to other EU countries before being packaged and sent to the American market.
Greek producers can also be severely affected since the US is a primary destination market for Greek table olives exports, with 2024 exports valued at 201 million euros. As the president of the Panhellenic Association of Standardised Olive Processors and Exporters mentioned, the new tariffs "will create a significant problem for exports" despite Greek olives having "created a strong brand and won the favor of American consumers."
Italy directs nearly half of its olive oil exports to the US market, valued at $436 million annually. While less affected than Spain under the current tariff regime, Italy remains vulnerable due to its reliance on the US as a key export destination. Portugal is less affected due to its diversified export markets, primarily Brazil and the Middle East, which provide some insulation from the US tariff impacts.
Market Position and Competitive Dynamics
Winners and Losers
Non-EU producers like Turkey and Morocco stand to gain market share in the U.S. due to favorable or comparable tariff rates at 10%. In contrast, U.S. domestic producers—who contribute only about 10,000 tonnes annually—may benefit marginally from reduced competition. However, they cannot meet overall demand, producing less than 5% of the extra virgin olive oil required for domestic consumption.
The differential initial tariff structure—20% for EU (Spain, Italy, Greece), 10% for many non-EU competitors, and 28% for Tunisia—creates an uneven playing field. European producers, especially Spanish exporters, are at a significant disadvantage. Non-EU producers are expected to capture portions of the market once dominated by Europe, particularly Spain.
Consumer Impact and Market Distortions
The U.S., which consumes 15% of global olive oil production but imports 98% of its supply, is heavily reliant on foreign producers. The tariffs are poised to raise consumer prices significantly, placing a financial burden on American households. The tariffs will distort the U.S. domestic market, with the primary impact falling on consumers through higher retail prices.
This price hike could also reduce olive oil consumption, pushing consumers toward less healthy alternatives such as butter and soybean oil. A decrease in adherence to the Mediterranean Diet is projected to increase healthcare costs by an estimated $17 billion annually due to associated chronic diseases. As domestic production remains insufficient, these tariffs essentially act as a tax on American consumers.
Long-term Implications
Beyond immediate disruptions, the tariffs may lead to structural changes in the global olive oil industry. The potential loss of U.S. market access could force the European olive oil sector to undergo major adjustments—similar to those already recommended for the EU wine industry, which faces structural overcapacity.
Strategic Responses
Government Support and Industry Initiatives
In response, Spain has introduced a €14.1 billion ($15.7 billion) financial aid package, combining loans and direct assistance to support the industry. Some Spanish companies are taking proactive steps by establishing bottling operations in the U.S. to bypass tariffs on packaged goods—importing bulk oil instead. Retailers, in parallel, are diversifying sourcing strategies by blending oils or shifting toward non-EU suppliers like Turkey and Tunisia.
Additionally, the Greek "Scientific Society of Olive Encyclopaedists" has proposed that the International Olive Council (IOC) lead negotiations with the U.S., advocating for tariff exemptions based on the product’s health benefits and its negligible impact on U.S. domestic production.
Adjustments for European Olive Oil Producers to Navigate US Tariffs
To navigate the challenges posed by U.S. tariffs, European olive oil producers must adopt practical strategies focused on supply chain adjustments, market realignment, financial resilience, collaboration, and policy advocacy.
Supply chain restructuring is key. Producers can reduce tariff exposure by shipping bulk oil and bottling within the U.S., which proved effective during previous trade disputes. However, this practice might raise concerns regarding the quality and traceability of the product due to the mixtures of bulk olive oil that might occur. This could lead to further economic losses for the producers and damage the fame of the olive oil. Overall, adjusting inventory, storage, and order practices can also help manage costs during volatile periods.
Strategically realigning markets offers additional resilience. Targeting premium segments in the U.S.—where consumers value origin and authenticity—can help absorb price increases. Exploring specialty retail, food service, and direct-to-consumer channels allows producers to escape mass-market price competition. At the same time, geographic diversification into emerging markets interested in the Mediterranean diet can partially offset U.S. losses.
Financial strategies include differential pricing across regions based on demand sensitivity, along with scenario planning for multiple tariff outcomes. Producers should also consider trade finance tools designed for export uncertainty.
Collaboration within the industry is vital. Shared logistics, joint sourcing of packaging, and cooperative market entry reduce individual risk and costs—particularly for smaller players. Coordinated action through industry bodies helps unify responses and protect sector-wide interests.
Finally, policy engagement must emphasize the consumer burden, the minimal benefit to U.S. producers, and the health implications of reduced olive oil consumption. Working with the International Olive Council may help push for diplomatic solutions.
Conclusion
The imposition of U.S. tariffs on European olive oil is reshaping global trade dynamics. Spain, a €6 billion industry leader, faces serious economic threats, while countries like Turkey and Morocco are poised to gain market share. Meanwhile, American consumers may experience higher prices and health-related costs.
The future of the European olive oil sector depends on a combination of short-term adaptability and long-term strategic transformation. Modernization, diversification, and coordinated action across industry and policy levels will be crucial in navigating this complex and evolving trade landscape.
Further reading:
Europe's Food Security in the Face of US-EU Trade Tensions: Challenges and Opportunities
Trump’s Tariffs on Food Trade: How Farmers, Traders & Consumers Will Be Affected
Tariffs Explained: A Consumer Breakdown of Rising Food Prices in 2025
Sources:
https://english.news.cn/20250322/b5c7b9a6917144f7b7c094f084b208b4/c.html
https://geodis.com/us-en/blog/increasing-tariffs-how-protect-your-import-business
https://www.aboutoliveoil.org/olive-oil-tariff-update
