Two days before the ball dropped on 2020, the United States Trade Representative (USTR) announced additional tariffs on new wine and spirits categories as part of the long-running saga formally known as the Enforcement of U.S. WTO Rights in Large Civil Aircraft Dispute.
Although the end-of-the-year timing brought a dramatic flair to the announcement, such retaliation of this sort did not surprise the groups that have been working to bring attention to the impact of these tariffs on small businesses across the U.S.
But now, as the Biden administration prepares to assume power, there’s new optimism about the future of U.S. tariff policies. Many parties are vying for the president-elect’s attention on his first day in office, but the act of removing tariffs offers an easy win with little cost, says Ben Aneff, president of the U.S. Wine Trade Alliance (USWTA). “The budget office is not allowed to consider income from tariffs in any budget matters,” he explains. “Eliminating tariffs on wine and spirits is something that could provide relief, and it officially costs the United States zero dollars.”
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Joining the USWTA in the fight is a new organization, the Coalition to Stop Restaurant Tariffs, a chef-led group that represents businesses in all 50 states. Formed in early December, the Coalition has been working closely with the USWTA to convince the Biden transition team that tariff relief should be an immediate focus of the administration. The recently added tariffs simply increase the urgency.
The Coalition’s aim is to press the Biden administration to issue an executive order that would swiftly lift all food and wine tariffs. Andrew Fortgang, a member of the group’s leadership team and co-owner and wine director of Le Pigeon and Canard restaurants in Portland, Oregon, says, “We began our outreach to the transition team as soon as Biden won the election and continue to make our request known.”
Although legislative action such as the Restaurant Act is difficult and time- consuming to pass, an executive action can take effect “with the stroke of a pen,” as Coalition members Kwame Onwuachi and Alice Waters noted in a December 30 op-ed in the Washington Post.
New Tariffs, New Pain
Such an executive order would provide more timely relief than waiting for the next round of the USTR’s tariff-review process. Just over a year ago, members of the wine industry gathered in Washington, D.C., to testify and explain why French sparkling wine and Champagne should be spared from tariffs related to the Digital Service Tax dispute (separate from the aircraft dispute). That effort was successful, but despite a record-setting number of comments from industry members, as well as bipartisan congressional support, tariffs related to the Large Civil Aircraft Dispute remain in place on a range of European wine and food products and are subject to an ongoing review process.
The additional tariffs announced at the end of the year effectively cover all French and German wines, as well as grape-based distilled products such as Cognac and Armagnac.
Relief has never been more needed. The Bureau of Labor Statistics December jobs report, released on January 8, shows that more than 372,000 restaurant and bar workers lost their jobs last month, the largest job loss since April. The latest tariff expansion, which went into effect January 12, does not provide an exception for goods on the water. As a result, Aneff says, “suppliers will need to raise the prices on key items for restaurants and small businesses around the United States as we head into the heart of the most challenging winter our country has faced in decades.”
While an executive order offers some hope for immediate relief, the announcement that Biden plans to appoint Katherine Tai as his USTR is also potentially good news for a timely resolution of the Large Civil Aircraft case. According to Aneff, “Katherine Tai’s selection was applauded broadly around the U.S. for a variety of reasons. She is an absolute expert in these matters.” In her current role, as chief trade counsel for the House Ways and Means committee, Aneff notes that “Tai has had many discussions on the impact that tariffs on wine cause U.S. businesses.”
However, although Aneff believes Tai is prepared to take a leadership role, she must first be confirmed by the Senate, which is unlikely to happen before the upcoming February carousel date. Without new appointed political leadership, the department isn’t expected to make any changes. Barring an executive order, there would likely be no real tariff review until the carousel’s next revolution, in August 2021.
So the waiting game continues, but there is hope that the message is going to be heard. “We are optimistic because of our outreach to the administration,” says Fortgang. “What we’ve heard back is a clear understanding of the pain restaurants are feeling now, and an honest desire to help small businesses.”
Aneff urges industry members to reach out to their representatives and ask them to push the incoming administration to end the tariffs on wine as quickly as possible. “Our point to the Biden administration is that we are a country in crisis and this is an action that he can do on his own that would bring immediate relief to massive numbers of U.S. businesses who are reeling after a year of tariffs and close to a year of the worst pandemic in a century.”
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Christy Frank is a partner at Copake Wine Works, a shop in the Hudson Valley of New York. She is an advanced sommelier with the Court of Master Sommeliers and holds the WSET Diploma in Wines.