Like a recurring bad dream, it’s back. The threat of 100 percent tariffs on wines and spirits from Europe is once again looming, and the consequences are just as dire as the last time the industry faced this crisis. (Important note: Don’t be confused by the U.S. Trade Representative’s (USTR) just-announced decision to exclude wine in the tariff dispute regarding France’s digital services tax—that temporary victory involves an entirely separate negotiation.)
You will remember the original threat of 100 percent tariffs on European wines and spirits in early 2020 in retaliation to the EU’s illegal subsidies to Airbus. The U.S. beverage alcohol industry—already crippled by the 25 percent tariffs on many wines and spirits from Europe implemented in October 2019—united in an unprecedented fashion, successfully lobbying congressional representatives and the USTR and dodging the tariff bullet. For six months.
Yet every 180 days the USTR revisits tariffed products until a dispute is resolved. So here we are, the review date of August 12 fast approaching, and the EU is still not in compliance (in other words, the Airbus subsidies continue).
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“The USTR can increase tariffs on wine in size as well as scope, meaning they could raise the tariff amount up to 100 percent and could add additional categories such as wines from Italy, Champagne, and wines over 14 percent,” says Ben Aneff, managing partner of Tribeca Wine Merchants and president of the U.S. Wine Trade Alliance (USWTA) which was formed at the end of last year to create a unified industry voice.
Once again, the industry must make the administration understand the “truth about tariffs on wine,” he explains. “They hurt American businesses more than they punish EU countries. For every $1 billion of damage to the EU, these tariffs cause $1.032 billion to U.S. businesses because of the three-tier system. This makes tariffs on wine ineffective in influencing the EU to change their behavior.”
Take Action: What You Can Do
The coming days are extremely important for the congressional lobbying efforts, as well as the USTR portal for receiving comments which closes on July 26. “We must have a broad push by every tier in our industry to reach out to Congress; this will have tremendous impact,” says Aneff. The USWTA has created the Endwinetariffs.com portal where consumers and trade can easily connect directly with their local representatives and the USTR to register their opposition. There is a useful suggested script to use, and business owners are urged to also share their personal stories to illustrate why these tariffs would be so devastating.
Unfortunately, even if we win this round, our industry could find itself in the trade war crosshairs again in the future, regardless of a potential regime change. “Both Republicans and Democrats are broadly in favor of more tariffs on products from Europe to bring the EU into compliance,” Aneff says. Many Democrats, for example, have publicly praised USTR deputy Robert Lighthizer for his work on this aircraft dispute. “Boeing is the U.S.’s largest exporter and the EU’s illegal Airbus subsidies are estimated to have cost hundreds of thousands of American jobs,” Aneff explains. “The EU needs to scrap these subsidies, and we need to show why tariffs on wine are not the most effective way to make that happen.”
The good news: The U.S. wine industry is significantly stronger and more prepared today, believes Aneff. “We’ve learned how to wage these battles in D.C. and the block-and-tackle nature of how to advocate at the federal level. We are in a much better position than we were this time last year, but it remains a difficult task.”
Aneff is also working on a bill in Congress that would refund tariffs already paid by U.S. businesses, particularly in light of the massive economic strain the pandemic has caused across the wine, restaurant, and hospitality industries. “It’s a huge lift,” Aneff says. “We’re going to need as much help as possible.”
Kristen Bieler is the editor-in-chief of SevenFifty Daily and the editor in chief of Beverage Media Group publications. Based in New York City, she has been writing about wine, spirits and food for nearly two decades, and her work has appeared in GQ, TASTE, and Food & Wine Magazine’s Annual Wine Guide, among others. She is also a judge at the Ultimate Wine Challenge. Follow her on Instagram: @bielerkristen.