How Tariffs Could End Italian Pasta in the U.S.

0:05The first thing that hits you when you walk into the pasta factory is the aroma.

0:13It's sweet and nutty because of all these kind of freshly ground wheat berries. And honestly, it's a bit like the smell of freshly cooked pasta. It kind of makes you hungry. That's our colleague Margarita Stancati. Recently, she toured La Moluzana, one of the biggest pasta makers in Italy. Margarita watched as curls of pasta rained down, like golden ribbons from a conveyor belt. It was pasta made the Italian way. What happens is that the dough is essentially extruded through these bronze dyes, which are sort of perforated discs. And depending on which type you use, that gives the pasta its distinctive shape.

0:57And this process, you know, the high quality flour, the spring water, the bronze dyes, the slow drying process is what makes the pasta special. It's what makes pasta sauce cling better to it and what gives it bite. It basically helps ensure that it stays al dente.

1:21And why were you there at this factory? So the reason I went to La Molizena factory was to speak to its CEO, Giuseppe Ferro. And he wanted to talk to me because he is worried. Giuseppe Ferro is worried because Italian pasta makers like La Molizana are now at risk of losing a major export market, the U.S. The Commerce Department announced these whopping tariffs on Italian pasta makers, including his own. Many of them would be subject to potentially 107 percent tariffs. One of the highest tariffs imposed by the U.S. administration on any good anywhere in the world. 107 % tariffs. It's the kind of tariff Margarita calls an export killer.

2:15This is the first time we're seeing so many Italian companies, literally the bulk of exporters to the U.S., affected by potentially export-killing tariffs. What does that actually mean? Like, what happens if that tariff is implemented and sticks? I mean, I think it ultimately hits people, you know, in their kitchens, in their dining rooms. It's possible their favorite fusilli, penne may no longer be available in the stores.

2:48Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Thursday, November 13th.

3:01Coming up on the show, how a long simmering battle over pasta is finally boiling over.

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3:59Pasta literally means dough, and it's short for pasta asciutta, which literally means dry dough, which is a pretty good summary. Our colleague Margarita, in case you can't tell, really knows her pasta. There's spaghetti, spaghettoni, spaghettini, cappelli d 'angelo, bucatini. She's Italian and lives in Rome. Tagliolini, spaghetti quadrati, fusilli lunghi. Then we can move to the shorter varieties. And pasta is central to Italian identity.

4:42I've left out all the stuffed pasta as well. But of course, pasta isn't only loved in Italy. Americans can't get enough of it either. Each year, Americans consume more than 6 billion pounds of it, according to the International Pasta Organization. Which, yes, that's a real thing. Most of that pasta is made in the U.S., but a lot of premium pasta on grocery store shelves comes straight from Italy. And for decades now, Italian pasta makers have been subject to relatively low 5 to 10 percent tariffs in the U.S. So to understand what is happening today, we need to rewind to the 1990s. At that time, Italian pasta companies were flooding the U.S.

5:25market. So many of them were literally dumping pasta in the U.S. That means they were selling their pasta at below the cost of production to undercut their American competitors to price them out. Dumping in international trade is when a country exports a product to another country at a lower price than what it charges at home or below the production cost. If the nation getting the imports finds that the practice hurts domestic producers, that government can impose anti-dumping tariffs. In the 90s, American pasta makers lodged a dumping complaint against their Italian rivals. The complaint went to the agency that regulates international trade, the U.S.

6:06Department of Commerce, which conducted a review. So many Italian companies were found guilty of dumping by the Commerce Department and punished with tariffs, which are known as anti-dumping duties.

6:24Since then, a similar process has happened almost every year. American pasta makers file an anti-dumping complaint against the Italian pasta makers. And the Commerce Department launches a review and determines whether or not a tariff is needed. And this became almost like a kind of low-level bureaucratic war that U.S. pasta makers waged against their Italian competitors. But you know what? Like for most Italian companies, they kind of became fine with it. They, of course, denied they were dumping. But they came to view these tariffs as part of the cost of doing business in the U.S. And that's how things went for decades, until July of last year.

7:07What started as this kind of run-of-the-mill dumping complaint became something much bigger. It all started with a six-page letter dated July 31st, 2024. And the letter was written by American pasta makers addressed to the Commerce Department. At first, it was the usual thing. A complaint from two American companies accusing a bunch of Italian pasta makers of dumping. So the letter triggered a review of 13 Italian pasta companies. The Commerce Department requested paperwork from just two of those 13, La Molisana and Garofalo, which import the biggest volumes of Italian pasta to the U.S. And the companies at this stage are kind of cool with it.

7:53They're like, we got this, it's not our first rodeo. And here is where things take a strange turn. So, in September, the department issues its preliminary results, and it's a huge shock. What you pay for pasta at the grocery store or in a restaurant could skyrocket if a 107 % tariff on imported Italian pasta goes into effect. The measures which the Trump administration say are necessary to prevent dumping practices would kick in as of January and would be applied on top of the 15 % tariff that President Trump has imposed.

8:32The Commerce Department accuses the two companies that participated in the review, so Garofalo and Molizana, of being uncooperative with its investigation. And when the Commerce Department says uncooperative, what does it mean by that? They cite problems that range from, you know, untranslated Italian words in the documents, undefined acronyms, and failure to provide all the requested data. And what's more, they don't just punish the two companies that they examined. They applied this 92 % tariff on all 13 Italian companies, based on the assumption that the behavior of La Molizana and Garofalo is kind of representative of the group.

9:1692%. That would be on top of an existing 15 % tariff that the Trump administration placed earlier this year on all goods coming from the EU. Together, that would bring the total pasta tariff to 107%. A White House spokesman stressed that the 92 % number is preliminary and part of a technical review process. The Commerce Department is expected to make a final decision as early as January. Though, to be clear, this tariff wouldn't impact gluten-free or egg pasta imports. So, the Commerce Department sort of penalizes all of these companies on the basis of an investigation of two of them. And primarily because they were unhappy with the paperwork?

9:59Yeah, essentially they said, you know, you guys didn't do your homework properly. And what did the Italian company say in response? Their response was like, you know what, we followed exactly the same process we followed previously. They said, you know, it was absolutely not true that they weren't being collaborative. They say, you know, maybe there may be some small mistakes, but that happens. In the past, we've been able to fix them. Why not this time? Italian pasta makers were outraged. They noted that new Commerce Department analysts seemed less familiar with their specific Italian accounting practices.

10:33Analysts, La Molisana said, misread some of the data. For example, they treated some gross prices, which include tax, as net prices. Italy's biggest pasta exporters were essentially faced with a choice. Either we literally double the price of our pasta in America, or we pull out of the U.S. And most of the pasta producers I spoke to said it would just be too costly. It would make no sense for us to double the cost of pasta. We would just pull out of the U.S. market. And what would that mean for these Italian pasta producers? The U.S. is hugely important. So, for example, La Molisana, the U.S. represents about 10 % of its overall sales.

11:13So it is very important. Cumulatively, exports are about$770 million a year of Italian pasta to the U.S. For the affected pasta companies, it wasn't just the potential loss of a major market. Some of them started pointing out who was behind the original complaint. Yeah, so there was a twist in the story. So remember what we said about, you know, how these investigations are triggered? Somebody had to file a complaint. Exactly. So the Commerce Department cannot initiate these reviews. Someone has to file a complaint first. And that someone is usually a domestic producer, so American companies that also make pasta.

11:57And the thing about the domestic petitioners in this case is that one of them has actually a strong Italian connection. It turns out one of the American companies that filed the complaint is owned by a private equity firm run by an Italian businessman. and the same firm owns Italian pasta brands selling in the U.S. That's next.

12:30Italy's pasta exports to the U.S. are at risk of unraveling like limp linguine on a fork. What started as a tiff over paperwork has become a national crisis for Italy, and it's grown into a full-blown diplomatic dispute. This incident has blown up in Italy and it has been awkward for the right-wing government of Giorgio Meloni, which is an ally of Trump. And this got so big partly because it hits the pasta industry, which for Italy is hugely important. It's not just about Italy's exports to the U.S. It's also about national pride. You have the foreign minister getting directly involved in Italy.

13:11You know, they set up a special task force to handle this issue. You also have top EU officials getting involved. Right. It sounds like are we entering an era of pasta diplomacy with Italy and the EU at this point? Well, it's like, yeah, pasta wars, for sure. Which brings us back to the original complaint sent to the Commerce Department, filed by two American companies. One of them is the company that owns American-made Ranzoni Pasta. The second company is where things get interesting. That company is called Winland Foods. Now, Winland is actually owned by a private equity company, which has a pretty strong Italian connection.

13:51It's run by an Italian businessman, and it also owns two Italy-based pasta producers. Those pasta producers are not subject to the tariffs. And they could potentially stand to benefit in the U.S. market at the expense of their rivals if the duties are implemented. Which means Winland, and also the Italian pasta companies linked to it, stands to gain from the tariffs on its competitors. Some of the Italian companies were like, this decision by the Commerce Department hurts us not just with our U.S. competitors, but also with our Italian competitors. The Department of Commerce says it has no discretion in selecting which companies are included in the review.

14:33A person close to the private equity company said the group isn't involved in the day-to-day operations of the food companies it controls and plays no role in drafting anti-dumping complaints.

14:46And then, do American pasta makers benefit from these tariffs? I mean, the whole point of these tariffs, according to the Trump administration, right, is and the point of tariffs in general is to level the playing field. Is that actually happening? Yeah, I mean, that's a really good question. I think, you know, anti-dumping rules were put in place to make competition fairer and to protect the domestic industry. But what we're seeing here is these rules that were intended to make competition fairer, creating opportunities for potentially unfair competition. There are, you know, winners and losers in this.

15:29Can you say more about that? So, I mean, the winners, of course, is the domestic market, the U.S. pasta making market, and Italian companies that are not hit by the duties, including those linked to the petitioners, but also others. And the losers, of course, are the Italian pasta makers affected by this decision, that are facing the possibility of having to pull out of one of their main markets. But the biggest losers of all perhaps are U.S. consumers who perhaps as soon as January could find themselves with fewer choices when they go to the stores. So that hits more than, say, tariffs about car parts or steel.

16:13People have an emotional connection to pasta in the way they don't about, I don't know, other items affected by tariffs. Right. This is something that you interact with, like, on a daily or weekly basis, whenever you go to the store to buy, you know, food for the week or for the month. Like, pasta is a very common ingredient on that list. It hits people at home. I mean, it is possible that other goods will be hit by dumping duties. I mean, they're in place for all sorts of goods. But this is, I think, is the first time where we're seeing such a kind of staple of the American kitchen being hit by really, really high tariffs that potentially will make those items no longer available.

17:03That's all for today, Thursday, November 13th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Gavin Bade.

17:17Thanks for listening. See you tomorrow.