US steps back from 100% tariffs on EU wine

Import tariffs on European wines won’t increase for now, but many producers in Burgundy, Bordeaux, Rioja and elsewhere will continue to face a 25% levy, according to US trade officials.

There was some good news for wine lovers in the US ahead of this year’s President’s Day (17 February), after the Office of the US Trade Representative (USTR) chose Valentine’s Day to announce it would not impose any extra import taxes on European wines for the time being.

It had previously floated the idea of import tariffs ‘up to 100%’ on virtually all European wines, which US merchants and retailers said would raise prices, reduce choice and potentially cost thousands of jobs.

A bittersweet announcement

Celebrations were likely to be muted, however, after the USTR reaffirmed 25% import tariffs on still wines at 14%abv or below from France, Germany, Spain and also the UK.

Those four nations have been judged the key protagonists in a long-running dispute over subsidies paid to European firm Airbus, the main rival to US-based Boeing.

Plus, higher or expanded tariffs on European wines were still possible if the EU imposes its own retaliatory levies in a parallel trade dispute over US payments to Boeing, said USTR.

Existing tariffs begin to bite

Early evidence from several trade sources suggested the existing 25% tariffs, introduced on 18 October, have already affected the market.

Shipments of bottled, French still wines dropped by 17.5% in the final quarter of 2019, causing a €40m loss in sales and taking the shine off an increase in French wine exports for the year as a whole, said France’s wine and spirits export body (FEVS) last week.

The value of Burgundy exports fell significantly in the final two months of the year, said Louis-Fabrice Latour, vice-president of FEVS and head of the Louis Latour negotiant house.

For Burgundy, ‘the US is our biggest market’, Latour told Decanter.com on Friday (14 February), ahead of the latest USTR announcement.

He said that small wineries may find the US tariffs more difficult to deal with, partly because they tend to work with smaller-scale US distributors who are also under extra financial pressure.

But, he said Burgundy’s popularity in the US means it is important to keep making the effort. ‘We are loved in the US and we should still go there. If we don’t, we will lose contact.’

Separately, it emerged last week that the US tariffs have also damaged Scotch whisky exports from the UK in recent months.