There’s a sigh of relief across the industry. For now.
On Friday, February 14, the Office of the United States Trade Representative (USTR) announced that tariffs on many European wines and spirits will remain in place—the new status quo—for another 180 days, when the agency is required to revisit the situation. In other words, we’ve reached an official pause in what has become a white-knuckle roller coaster ride for a tariff-threatened industry.
For the drinks industry, that status quo means that still wine under 14 percent ABV from France, Germany, Spain, and the U.K. will remain subject to the 25 percent tariffs that have been in place since October 18, 2019. As will single-malt Scotch, some Irish whiskies, and some liqueurs and cordials from Germany, Ireland, Italy, Spain, and the U.K. Wines from other EU countries were spared. Sparkling wines and wines over 14 percent ABV were spared. And the existing tariff rates weren’t increased to the 100 percent rate proposed last December.
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Over the last 120 days, since the first round of tariffs was imposed, the industry mobilized grassroots support in a way that hadn’t happened in the nearly 90 years since Prohibition. The U.S. Wine Trade Alliance Facebook group is now burgeoning with 5,800 members. Over 25,000 messages posted to the USTR during the open call for comment; 30,000 letters were sent to elected officials. It was essentially a real time civics lesson and as Sariya Jarasviroj Brown, owner of Circo Vino, a wine importer based in Arizona, says, “I am heartened by how many good people exist in our industry.
Reflecting on this recent period of uncertain sanctions, Daniel Posner, president of the National Association of Retailers and owner of Grapes The Wine Company, in White Plains, NY, notes, “I think the industry did as well as can be expected in such a short period of time. These tariffs became effective October 18th. New tariffs were proposed in December and just two months later, we have no new tariffs in place for our industry. However, we need to get back to October 17th, when there were no tariffs.”
Posner’s perspective echoes across the industry: This result is a moment of relief in an ongoing battle, not cause for popping corks. The impact of the 25 percent tariffs are starting to work their way through the system. Items are reported as out of stock as importers held off on orders ahead of the announcements. Price increases—initially absorbed during the holiday season—are beginning to impact shelf prices and could soon impact restaurant wine lists.
In 180 days, the industry will be subject to the next turn of the carousel when the tariffs are revisited. While logic seemed to prevail in this chapter of the trans-Atlantic trade saga (the USTR raised tariffs on some European aircraft as part of this announcement, reflecting the actual Airbus-related origin of the dispute), there is no reason to believe that wine and spirits will disappear from the next round of proposed tariffed goods.
Through this waiting period, industry professionals can continue engaging with elected and appointed officials, ensuring they understand the regulatory quirks of our industry and how these tariffs impact us in ways they haven’t expected.
Looking forward, many believe the industry will be better prepared throughout the ongoing negotiations and announcements. Staying positive, Posner asserts, “We will win, and we will do so together, as one, which given how fragmented this industry has been almost 90 years, will be quite an accomplishment that we will all be proud of.”
Dispatch
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