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Champagne avoids US tariffs over French digital tax

French sparkling wines have no longer been listed as targets for retaliation over France's 'tech tax', but there is concern that more US import tariffs for European wines could materialise.

Champagne and other French sparkling wines had been among many goods threatened with higher US import tariffs ‘up to 100%’ in retaliation for France’s new digital services tax, which is expected affect US tech companies operating in the country.

This week, however, the Office for the US Trade Representative did not include wines on an updated list of products to be targeted with a new 25% tariff.

Handbags, lipstick and soap will face initial tariffs, rather than food or drink, although levies will be suspended for 180 days.

While that will be a relief to Champagne houses and Crémant sparkling wine producers, as well as US wine lovers and businesses, the issue of tariffs has not gone away.

Ben Aneff, president of the US Wine Trade Alliance, told Decanter.com that the ‘major issue’ was the separate dispute between the EU and US over aerospace industry subsidies.

French, Spanish, German and UK still wines at 14% abv or below have faced a 25% US tariff since October 2019, after the World Trade Organisation approved retaliation for illegal EU subsidies paid to the Airbus group.

The tariff list is now coming up for review, and the USTR has been asking for comments on what should happen next, with a deadline for submissions of 26 July.

‘On that list, effectively all EU wine is a possible category for retaliatory tariffs,’ said Aneff, who is also managing partner at New York-based Tribeca Wine Merchants.

It’s also possible that wine could be removed from the list of targeted products.

Many US wine businesses, trade bodies and consumers strongly opposed tariffs in submissions to a USTR hearing at the beginning of 2020, and the US Wine Trade Alliance has called on members to redouble their efforts before 26 July.

French wine industry leaders say tariffs have shrunk wineries’ exports to the US, while the Wine Trade Alliance said that tariffs were harming US businesses.

Aneff added that USTR was also investigating other European countries’ plans to introduce a form of digital services tax.

He said, ‘The ongoing investigation includes Italy, Austria, and Spain among others, so certainly wine could be included there as well. We expect the investigation to conclude in two-to-four months.’

See also: 

US steps back from 100% tariffs on EU wine, but 25% levy continues

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