The U.S. threatened to enact import duties of 100 percent as recently as December.

By Mike Pomranz
Updated January 21, 2020
MARK RALSTON/Getty Images

When countries enact tariffs, they often target products for economic reasons: like, perhaps, steel and aluminum. But sometimes, especially when tariffs are retaliatory, officials will instead target high profile imports just to make a point: like when the E.U. went after the most American of whiskies, bourbon.

The Trump administration has also been taking the latter approach with European wines. In October, many French wines were hit with 25-percent import duties (with the fuss being over E.U. subsidies for Airbus), and trade officials have continued to hammer home their unhappiness by floating the idea of bumping those numbers up as outlandishly high as 100 percent. After an initial threat back in August, the administration renewed the idea in December—and also, in a similar dispute over proposed French taxes on digital revenue, specifically named Champagne, which wasn't included in the previous 25-percent tariff scheme. All of this has put American wine importers (and fans of French wine) on edge.

But finally, some good news has emerged in these ongoing disputes. Regarding the digital tax dispute, on January 20, French President Emmanuel Macron tweeted, "Great discussion with [President Trump] on digital tax. We will work together on a good agreement to avoid tariff escalation."

Elaborating on that point, Reuters reports that the two parties have essentially agreed to postpone any action until 2021: France won't collect any digital taxes and America won't add any additional tariffs. (Worth noting, this deal is especially good for France if they find themselves dealing with a friendlier Democratic administration a year from now). "What we're proposing is to give ourselves time and to show our goodwill, to postpone the remaining payments to December," a French Finance Ministry source reportedly said of the planned three-percent tax, initially set to be collected in April.

Unfortunately, this does not resolve the much larger dispute over aircraft subsidies, and the possibility of a 100-percent tariff on all E.U. wines (as well as cheeses, Irish and Scotch whiskies, and many other products) remains a looming possibility. Industry experts suspect that either a resolution will be reached or that this tariff will be enacted—one that would result in billions of dollars of losses for American importers, wholesalers, retailers and restaurateurs that work with wines from Europe—potentially by February 14, 2020.

And, of course, we've seen similar handshake agreements before. After the G7 summit over the summer, France's Finance Minister went on the record as saying he thought the 100-percent tariff threat had "receded," only to have it rear its ugly head again four months later. Whether the Trump administration has the patience to wait 12 months this time around is up in the air, to say the least.

Update January 22, 2020: This article has been updated to clarify which specific wine tariffs have been put on hold and which negotiations are still ongoing.

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