Tunisia Seeks Trade Deal to Avert 28 Percent Export Tariff

Summary

Tunisian diplo­mats in Washington, D.C. are nego­ti­at­ing to avoid a 28 per­cent tar­iff on exports to the U.S., with ongo­ing dis­cus­sions led by Marouane Ben Jomaa. The poten­tial tar­iffs could impact key sec­tors like olive oil, dates, and hand­crafts, with the olive oil trade being par­tic­u­larly affected.

Tunisian diplo­mats in Washington, D.C., announced that diplo­matic efforts are under­way to nego­ti­ate a bet­ter trade deal with the United States.

The goal is to avoid a 28 per­cent tar­iff on all Tunisian exports to the U.S., which were delayed 90 days ear­lier this month and replaced with a base­line ten per­cent tar­iff.

Marouane Ben Jomaa, pres­i­dent of the Tunisian-American Chamber of Commerce and Industry, con­firmed the ongo­ing nego­ti­a­tions. 

In his view, the poten­tial appli­ca­tion of a 28 per­cent levy ​“risks com­pro­mis­ing the com­pet­i­tive­ness of key sec­tors such as olive oil, dates and hand­crafts.”

Ben Jomaa also noted how dif­fer­ent tar­iffs applied to com­pet­ing coun­tries would con­tribute to jeop­ar­diz­ing Tunisian mar­ket quo­tas in the U.S.

While sus­pended, the tar­iff scheme President Donald J. Trump pre­vi­ously announced would see E.U. mem­bers fac­ing 20 per­cent tar­iffs, with olive oil pro­duc­ers from Turkey, Morocco, and Algeria hit with a ten per­cent duty.

According to United Nations data, in 2023, direct exports of olive oil from Tunisia to the U.S. slightly exceeded $220 (€203) mil­lion.

Former Trade Minister Mohsen Hassan noted that the country’s exports ben­e­fited over the years from the U.S. Generalized System of Preferences (GSP), which aims to pro­mote eco­nomic growth in devel­op­ing coun­tries by allow­ing spe­cific vol­umes of duty-free trade.

According to Hassan, GSP helped Tunisia grow its exports to the U.S., pri­mar­ily dri­ven by olive oil and dates.

“Imposing a 28 per­cent tar­iff on Tunisian goods exported to the U.S. mar­ket would limit their com­pet­i­tive­ness and cre­ate obsta­cles to their access to one of the most impor­tant global mar­kets that Tunisian exporters have worked on in recent years,” he said.

If the tar­iff agenda does not change in the next three months, the base­line tar­iffs could also have con­se­quences for Tunisian exports to the U.S. that do not hap­pen directly between the two coun­tries.

“The U.S. is the biggest importer of Tunisian olive oil, both directly and indi­rectly. What goes in indi­rectly is more than what goes there directly from Tunisia,” Wajih Rekik, the chief exec­u­tive of CHO America, the U.S. branch of the largest Tunisian olive oil bot­tler and exporter, told Olive Oil Times.

The com­plex­i­ties of the olive oil trade between Tunisia and other large pro­ducer coun­tries, which are also exporters to the U.S., inter­twine with the tar­iffs that could poten­tially hit coun­tries to dif­fer­ent extents.

“When ship­ments go to the U.S. from Tunisia, that is a very obvi­ous trans­ac­tion. But vol­umes twice as large go to Spain, and from there they are shipped, or re-exported, to the United States,” Rekik said.

“Twenty-eight per­cent tar­iffs could have made some dam­age,” he added. ​“As every­one is now sub­ject to the same ten per­cent tar­iffs, the whole issue is cur­rently way more man­age­able.” 

The CHO America exec­u­tive referred to olive oil mar­ket dynam­ics in the United States, which show only a min­i­mal impact from higher prices in the last two years.

“The con­sump­tion remained strong even dur­ing short­age, with 30 to 40 per­cent higher prices,” Rekik said.

“Now prices are down, they dropped sig­nif­i­cantly, that means that the prices for the con­sumers will still be lower than in the past, even with a ten per­cent tar­iff,” he added.

Tunisian olive oil exports to the U.S. in the same period of the cur­rent year decreased in value by 26.8 per­cent com­pared to the first four months of 2024, pri­mar­ily due tolower olive oil prices at ori­gin.

Olive Oil Times reached out to some Tunisian pro­duc­ers, who did not com­ment on the quickly chang­ing sce­nario but con­firmed that the high level of uncer­tainty does not help sus­tain their busi­nesses.

Reda Al-Shakandali, pro­fes­sor of eco­nom­ics at the University of Carthage, told local media that the tem­po­rary sus­pen­sion of tar­iffs cre­ates uncer­tainty that dis­rupts the global econ­omy.

According to the pro­fes­sor, Tunisia’s econ­omy is frag­ile and heav­ily reliant on tourism, olive oil and fer­til­iz­ers, with remit­tances from Tunisians abroad play­ing a sig­nif­i­cant role.

In his view, the con­se­quences of the tar­iffs and the uncer­tainty will impair invest­ments.

Even amidst such uncer­tainty, Tunisian olive oil exporters and diplo­mats hope for nego­ti­a­tions to defuse the threat­ened tar­iff spike and con­sider the whole olive oil trade dif­fer­ently.

“Olive oil is a healthy prod­uct. Science tells us that it reduces the risk of heart dis­ease, Alzheimer’s dis­ease, and much more. In a way, olive oil is a med­i­cine for the American con­sumer,” Rekik said.

“We also know that the Trump admin­is­tra­tion does not favor seed oils. And olive oil is the health­i­est alter­na­tive out there,” he added.

“As the United States pro­duces only a frac­tion of the extra vir­gin olive oil it con­sumes, I believe that if there is any prod­uct that could ben­e­fit from an excep­tion, it should be olive oil,” Rekik con­tin­ued.

According to Rekik, U.S. con­sumers could do with­out sev­eral food prod­ucts imported in sig­nif­i­cant quan­ti­ties.

“Look at European wine. There are a lot of wines being pro­duced in the U.S. And that is not the health­i­est thing out there in terms of heart or brain health,” he said.

“That is why I am hope­ful that, within that logic, the Trump admin­is­tra­tion would con­sider excep­tions on cer­tain prod­ucts, and olive oil will be a big one there,” Rekik under­lined.

While Tunisia exports a broad range of goods and ser­vices to the U.S., ani­mal and veg­etable fats such as olive oil pro­duce the most sig­nif­i­cant num­bers.

Agriculture has con­tributed strongly to Tunisian Gross Domestic Product (GDP) growth in recent years.

According to the lat­est data from the Tunisian General Labour Union, almost 87 per­cent of the country’s infor­mal work­ers are employed in agri­cul­ture.

The infor­mal econ­omy includes all activ­i­ties not reg­u­lated or mon­i­tored by the gov­ern­ment and accounts for 30 to 40 per­cent of the country’s GDP.

Local com­pa­nies are at work defin­ing pos­si­ble sce­nar­ios while nego­ti­a­tions begin.

“I know lots of com­pa­nies are work­ing on short-term solu­tions, like bring­ing more inven­tory to the U.S., but those are short-term ini­tia­tives,” Rekik said.

“What is going to mat­ter now is what will remain long-term,” he con­cluded. ​“Is this [tar­iff change] a real long-term change des­tined to impact mar­ket dynam­ics, or is it just short-term?”

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