French wines and Scotch whisky targeted by US tariff hikes

Bordeaux and Burgundy wines will be among those hit by a US decision to impose $7.5bn of extra tariffs on European imports this month, potentially causing headaches for both merchants and wine lovers, unless a deal is reached with the EU.

Which wines are being targeted by the US tariffs?

French wines will face a new 25% import tariff from 18 October, said US trade officials last night (2 October), in a move that has been met with dismay by wine trade bodies on both sides of the Atlantic.

Spanish, German and UK still wines, plus single malt Scotch whisky, face the same 25% tariff as part of $7.5bn of extra levies on a wide range of goods, from Stilton cheese to bed linen.

Approval for the tariff hikes was granted by the World Trade Organisation following a ruling against EU subsidies for the Airbus group – a main rival to US group Boeing.

Champagne and sparkling wines appeared to have avoided the new tariffs, after a list published by the US Trade Representative’s office specified ‘non carbonated’ wines.

Italian wines, too, were absent as US officials named France, Germany, Spain and UK as the main protaganists.

EU reaction: Wine in a fresh trade war?

Wine may be a pawn in a new trade war unless a deal can be brokered between the EU and US.

The EU has also asked the WTO for permission to impose tariffs on American imports, over a parallel dispute relating to US government subsidies for Boeing – the main rival to Airbus.

European trade commissioner, Cecilia Malmström, called the US decision to go ahead with tariffs ‘short-sighted’ and ‘counterproductive’.

But, she said the European Commission would follow suit.

‘Our readiness to find a fair settlement remains unchanged. But if the US decides to impose WTO authorised countermeasures, it will be pushing the EU into a situation where we will have no other option than do the same.’

Both sides have expressed their desire to find a solution.

‘We expect to enter into negotiations with the European Union aimed at resolving this issue in a way that will benefit American workers,’ said US trade representative Robert Lighthizer.

Wine trade concerns

European wines trade body, the CEEV, said it ‘regretted’ the decision and warned of a loss of market share for French, German, Spanish and UK still wines in the US.

‘The disruption caused by retaliatory tariffs will result in significant reduction of business activity,’ said Ignacio Sánchez Recarte, secretary general of CEEV.

EU wine exports to the US were worth €3.76bn in 2018, with still wines from France, Spain, Germany and the UK worth €1.38bn of that total.

News of the US tariff hikes was also met with dismay at the California-based Wine Institute, fearful of EU reprisals.

‘We are concerned that this action will lead to increased tariffs on US wines and set back our efforts to continue growing US wine exports,’ said the Institute’s president and CEO, Bobby Koch.

The EU is the largest export market for US wines, worth $469 million in 2018.

‘[The] Wine Institute has always supported the fair, open and reciprocal trade of wine around the world,’ said Koch.

At CEEV, Ignacio Sánchez Recarte said that US wine lovers and merchants would also be affected. He called on both sides to leave wine out of the aerospace dispute.

‘We do not understand why agricultural products such as ours are involved in a conflict generated by other sectors,’ he said.

One US merchant previously told Decanter.com that he had cut down on purchases of European wines as a precaution.

‘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 and subsequent tariff hikes.

‘We will have to deal with it,’ said Clyde Beffa, co-owner and buyer K&L wine merchant, following news of the tariff plans this week. ‘Hopefully it will be a short-term problem.’


See also: Fresh China tariffs a worry for US producers