White House Spares European Wines from 100 Percent Tariffs for Now; 25 Percent Duties Remain in Place

After reviewing the tariffs in the Airbus fight, the U.S. 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, U.S. Trade Representative Robert Lighthizer issued a decision in his review of the ongoing trade war between the U.S. 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 U.S. 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 E.U. 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 U.K., 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 U.S. 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 U.S. and European producers have begun looking to other markets. French wine exports to the U.S. dropped dramatically in November and have continued to decline since.

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By Mitch Frank | Wine Spectator