After reviewing the tariffs in the Airbus fight, the US Trade Rep has raised duties on plane parts and is staying the course with wine tariffs.
The Trump administration sent wine consumers a decidedly mixed Valentine today. In the early evening hours, US Trade Representative Robert Lighthizer issued a decision in his review of the ongoing trade war between the US and the European Union over subsidies to plane manufacturer Airbus.
The good news?
The administration has decided not to raise tariffs on European wines for now, opting instead to raise tariffs on European airplane parts from 10 percent to 15 percent.
The bad news?
The 25 percent tariffs on French, Spanish and German still wines under 14 percent alcohol remain in place, promising continued pain for winemakers in those countries and consumers, retailers, restaurateurs and importers in the United States.
Airplane parts, Scotch, cheese and wine:
The fight stretches back almost two decades, to US objections concerning government subsidies that France, Spain, Germany and the United Kingdom has given to Airbus. On Oct 2, the World Trade Organization (WTO) gave the U.S. the green light to impose duties on $7,5 billion worth of European goods after the EU was found guilty of unfair subsidies. The following day, the Trump administration announced 25 percent tariffs on a wide range of European products, including wine, cheese, olive oil, single-malt Scotch and cashmere sweaters, which went into effect Oct 18. It imposed 10 percent tariffs on European airplane parts.
The tariffs covered all wines from France, Spain, Germany and the UK, except for sparkling wines, wines over 14 percent alcohol and large-format bottles. Containers of wine were on the ocean when the tariffs were announced, and when they arrived after Oct 18, they effectively became 25 percent more expensive the moment they touched US soil.
Wineries, importers and retailers tried to swallow as much of the cost as possible, especially during the holiday season, but prices have gone up. What’s more, importers have stopped bringing several wines to the US and European producers have begun looking to other markets. French wine exports to the US dropped dramatically in November and have continued to decline since.
No change for now:
By law, the Office of the US Trade Representative (USTR) must review enforcement actions four months after implementation. That meant a decision to continue, suspend or modify the tariffs was expected by Feb 17.
The statement released this evening was brief: “The United States is increasing the additional duty rate imposed on aircraft imported from the EU to 15 percent from 10 percent, effective March 18, 2020, and making certain other minor modifications.” Those minor modifications primarily consist of removing tariffs on European prune juice.
The USTR must review the tariffs again by August. US and EU officials continue to negotiate, but there has been little sign of progress. That means that for the foreseeable future, the 25 percent tariffs are here to stay.
“We applaud the administration on its restraint in not increasing or expanding the tariffs on European wine,” said the U.S Wine Trade Alliance, in a statement. “Wine tariffs remaining at the status quo is a testament to the hard work put in by the wine industry, but it’s still a shallow victory. The administration’s refusal to remove the current 25 percent tariffs on select European wine will continue to hammer American business owners and consumers.”
Source: Wine Spectator