Wine importers, wholesalers, restaurateursand retailers received a valentine reprieve on Feb. 14: The U.S. Trade Representative decided against imposing a 100% tax on wine and other products from the European Union. But the tariff will be reevaluated in August, plus the 25% tax that took effect in October on nonsparkling wines up to 14% alcohol by volume from France, Germany, Spain and the U.K., remains in effect.
Many distributors and producers initially swallowed some of the financial burden of the 25% tax, rather than pass the increase off to customers during the holiday season, but that’s not a sustainable strategy if the tariff wars drag on or escalate. Those with diversified portfolios can focus on their sparkling and higher- alcohol wines; large-format bottles are also exempt for now.
The 25% tariff also covers Scotch and liqueurs made in Germany, Ireland, Italy, Spain and the U.K. The proposed 100% tax would be levied on wines from all EU nations and include sparkling, fortified and bulk wines at all alcohol levels, as well as Irish whiskey.
A number of trade groups oppose the tariffs, which stem from disputes over subsidies involving Airbus and Boeing, and have highlighted the adverse effect on U.S. companies and consumers. A recent study commissioned by the Wine & Spirits Wholesalers of America says that the U.S. beverage alcohol industry may lose nearly 36,000 jobs and more than $1.6 billion in wages this year, costing the U.S. economy upwards of $5.3 billion.
Meanwhile, the Global Trade Atlas reports that for November—the first full month of the 25% tariffs—wine exports from France to the U.S. dropped 48%. But exports from France to China for the month increased 35%, and French wine exports to China were 118% higher than those sent to the U.S.