A Tariff Loophole Has Tripled Imports of Higher-ABV Wines
When the Trump administration slapped a 25-percent tariff on large swaths of wines imported from France, Germany, Spain, and the United Kingdom last year, everyone in the industry knew these price hikes would affect their business. However, one change may not have been immediately apparent—imports of stronger wines are spiking.
According to the Wall Street Journal, imports of European wines over 14 percent ABV have tripled—up to $434 million from just about $150 million a year ago. At the same time, imports of wines under 14 percent ABV from the four aforementioned countries have been slashed nearly in half to $840 million. Yes, it may seem like we all have reasons to get drunker in 2020—but that actually has nothing to do with the change; Americans are just being thrifty.
In the U.S., wines are taxed by their ABV, with higher ABV wines having higher taxes creating different wine tiers. When the Trump administration applied its tariffs, the new duties only applied to the lowest ABV group: wines up to 14 percent alcohol. So how are importers able to get around these significant 25 percent price increases? They’ve gravitated towards importing more wines over 14 percent ABV—even if it’s just a couple hundredths of a percent higher.
“The very first question we ask is ‘What’s the alcohol level?’ which is not a question we ever asked before,” Eric Faber, general manager of wine distributor Cutting Edge Selections, told the WSJ. In one example, the paper points to a 2019 Bordeaux labeled at 14.02 percent ABV: Those extra decimals mean the wine can be sold for its suggested retail price of $153 instead of a much more eye-popping $191.
This quirk in the tariffs has apparently had impacts across the entire wine business. “The reality is that all our U.S. customers, except very few, don’t buy any Bordeaux with a lower level of alcohol,” Hubert Buchmuller, who works for a Bordeaux wine merchant, was quoted as saying. “That’s the big problem for our industry.”
However, the hope is that the Biden administration will remove these tariffs—which were controversial when they were applied—not long after taking office. If so, wine lovers will once again find it easier to enjoy all those 13.98 percent ABV wines they’ve been missing.