French Wine Spared from Latest Round of Tariffs

The COVID-19 pandemic has upended the economy so much it’s easy to forget the wine industry was already dealing with its own economic wrench-in-the-gears before coronavirus even struck: tariffs. Back in October, the Trump administration imposed 25-percent import duties on large swaths of wines from France, Germany, Spain, or the United Kingdom as retaliation for an aerospace industry disagreement. And another international spat—this time over a digital services tax in France—threatened to make things worse, with the White House even tossing around the idea of jacking up tariffs on some French wine to 100 percent.

But there's good news for anyone who’s been preparing to double their French wine budget. It appears that a fresh French wine tariff is officially off the table… though other French products aren’t so lucky.

Back in January, France and the U.S. announced they had reached a truce to postpone any action on the digital tax—which would mostly impact major U.S. tech brands like Facebook and Google—including tariffs, until 2021. However, last Friday, the Office of the U.S. Trade Representative (USTR) revealed the list of products it plans to add a new 25 percent tariff to on January 6, 2021—creating a 180-day ticking clock for the dispute to be resolved (or not). In all, 21 types of products are named, all of which are beauty products or handbags—thus sparing both the beverage and food industries from further damage. (Keep in mind, the previous tariffs are all still in effect.)

But victory probably was no coincidence, it was hard-fought by the industry. After the announcement, the Wine & Spirits Wholesalers of America (WSWA) pointed out that they’ve been pressuring the Trade Office for this decision for over a year. “We are pleased that the USTR is responding to our efforts and has made the decision to keep French sparkling wine and champagne off of this list of tariffed goods. WSWA is united with the industry and will continue to fight against retaliatory tariffs on EU-origin wine and spirits,” President and CEO Michelle Korsmo said in a statement. “WSWA has been urging the USTR since June of 2019 to remove EU wine and spirits from the table of a trade dispute that originated outside of the alcohol industry—long before the pandemic. But now, at a time when the hospitality industry is fighting for its life, additional tariffs will have catastrophic and compounding effects for years to come—a knockout blow for many.”

And nearly two dozen wine industry representatives spoke out against the proposed tariffs at government hearings at the start of the year—including Jeff Zacharia, director of the National Association of Wine Retailers, and Ben Aneff, president of the U.S. Wine Trade Alliance. “I'm hopeful that the U.S. Trade Representative is starting to understand that tariffs on wine hurt U.S. businesses much more than they hurt businesses in the E.U., which make them very weak as an instrument,” Aneff said, according to Wine Searcher. “The strong turnout from the wine industry in January on the digital services tax matter, I am certain is a part of why wine was not a part of these tariffs.”