US officials can legally hike tariffs on European products in retaliation for unfair EU subsidies paid to the Airbus group, a WTO arbitration panel has ruled, according to news sites Bloomberg, Reuters and Politico.
Wine lovers, producers and merchants on both sides of the Atlantic could be affected if no settlement is reached in the aerospace industry dispute, although the scope of the latest WTO ruling was not yet known and higher tariff barriers were not certain to be imposed.
Decanter.com knows of at least one US merchant that has reduced orders for European wines due to general concern over tariff hikes.
Both US and EU seeking permission to impose tariffs
US officials said in April 2019 that they were seeking WTO approval to impose tariffs on up to $11bn-worth of European goods, including wines, Champagne and whiskies, in retaliation for the ongoing Airbus subsidies.
But the European Commission said it was also seeking WTO approval to impose up to $20bn of subsidies on US products entering the EU, in retaliation for unfair subsidies paid to Boeing, the US-based competitor to Airbus.
Trump’s previous tariff threats
US President Trump has repeatedly singled out French wine for possible tariff hikes over different trade issues in the past year.
However, pressure appeared to ease following his meeting with French president Macron at the recent G7 summit in Biarritz.
While that meeting focused on French efforts to recoup more tax from US tech giants, the catalyst for higher wine tariffs may yet be the long-running argument over aerospace subsidies.
‘We have temporarily decreased purchases’
Some US merchants have begun preparing for the worst.
‘We have temporarily drastically decreased our European wine purchases, as we fear a potential increase in import tariffs,’ said Shaun Bishop, CEO of California-based JJ Buckley, prior to news of the latest WTO ruling.
‘The supply chain takes months to get wine into the US so we do not want to risk getting stuck paying new, unknown tariffs. Hopefully, we will get clarity and time to react, should anything materialise,’ he told Decanter.com last week.
However, other US merchants were understood to be taking more of a wait-and-see approach.