Tough times for German and French vintners as US imposes punitive tariffs on their high-alcohol wine

US – German and French wine producers are facing a new challenge in accessing the US market following the decision by the White House to place 25% tariffs on high alcohol wine from their countries.

According to a document filed by the Office of the U.S. Trade Representative the tariffs were part of a long-running trade dispute over aircraft parts.

The United States has been claiming that subsidies made by France, Spain, Germany and the U.K. to European aircraft manufacturer Airbus were hurting the US aircraft giant Boeing.

In retaliation to this, the Trump administration imposed tarrifs on wines from the four countries as a means of putting pressure on them to end subsidies to Airbus.

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Starting in October 2019, wines that were 14% alcohol or less were hit with a 25% tariff, those above 14% were however exempted from the tariffs.

As from Jan. 12, the punitive 25% tariff will be applied to those above 14% as well, making these drinks way more expensive and beyond reach for many American consumers.

Premium cognacs costing $38 or more a litter will also get slapped with the new import duties, the USTR said.

The new tariffs, which come in the waning days of the Trump administration, have however, been widely criticized by organizations including the Distilled Spirits Council and the U.S. Wine Trade Alliance.

“We need to convince President-elect Biden that tariff relief should be a major priority of his first few weeks in office, and this is no small task,” Ben Aneff, president of the U.S. Wine Trade Alliance, said in a statement.

While European wine and spirit products would be directly hit by the tariffs, U.S. groups are quick to point out the changes would also disrupt and negatively impact the U.S. hospitality industry as well as producers, wholesalers and importers of alcohol.

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 With restaurants and other establishments closed or seeing business severely curtailed because of the pandemic, the alcohol industry said cutting off a key source of business through higher tariffs would further harm its members.

“We continue to urge the EU and the US to negotiate an agreement that will end the excessive and unwarranted tariffs on distilled spirits across the Atlantic without any further delay,” the Distilled Spirits Council said.

The impending tariffs would most likely be beneficial to U.S. producers who could see increased demand for their products if businesses and consumers aren’t willing to pay more for the imported offerings.

But in a statement, the Comité Européen des Entreprises Vins and the U.S.-based Wine Institute called for further open access to each other’s markets “by fully, immediately and simultaneously eliminating all tariffs on wine.”

“The longstanding EU-US wine trade alliance is important for the health of our sector and should be preserved and supported,” the groups said.

“Our wine trade relationship is the largest in the world and a key driver for EU and US wine export growth. … On both sides of the Atlantic, we are aware of the importance and benefits of maintaining this bilateral partnership.”

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