Page 19 - Wine Spectator (January 2020)

GRAPEVINE

NEWS FOOD & TRAVEL PEOPLE COLLECTING

EU Wine Faces Threat of 100% Tariffs

BY MITCH FRANK

wines will lose most of their market in the U.S.,” said Renzo Cotarella,
s European vintners graple with U.S. tariffs of 25% on many president of Antinori. “At this level of tariffs, an effective solution is
wines, they now face another potential hurdle. The Office practically impossible to find.”
of the U.S. Trade Representative (USTR) has announced There is no guarantee that the new tariffs will go into effect. The fi-

that it is considering new, higher tariffs on European foods, nal duties might be lower or cover fewer products. The USTR is accept-
A including all wines. Those ing public comments on the proposed
tariffs could be imposed after Jan. 13 tariffs until Jan. 13 at regulations.gov.
and could be as high as 100%. U.S. and EU officials have been meet-
“I’m freaking out. And I don’t nor- ing to negotiate a solution, though

mally freak out,” said one wine im- there has been little sign of progress.
porter who asked not to be identified. If the duties do go into effect, the im-
“We were planning to hire new people. pact would be devastating to wineries,
That could be shelved and we could importers, restaurants, retailers and, ul-

potentially have to consider layoffs.” timately, consumers. After the first
The proposed tariffs are the latest round of tariffs, many wineries, import-
salvo in the U.S. government’s fight ers and retailers swallowed part or all of
with the European Union over support the 25% cost, shielding consumers from
for airplane manufacturers Airbus and increased prices. “It was very important
Boeing. On Oct. 2, the World Trade to not pass along price increases to the

Organization (WTO) gave the U.S. the consumer during the holiday season,”
green light to impose duties on $7.5 bil- said Sandra LeDrew, chief operating of-
lion worth of European goods after the ficer of Terlato Wine Group, which im-
EU was found guilty of granting unfair Three Strikes Against European Wine ports Chapoutier and Piper-Heidsieck.

subsidies to Airbus. The following day, In October, as part of a trade dispute with the EU over subsidies “People were just going to hold where
the Trump administration announced to Airbus, the Trump administration imposed 25% tariffs on still they were until the end of the year,”
25% tariffs on a wide range of European wines from France, Spain, Germany and the U.K. with less than said David Kenney, vice president of
products, including wine, cheese, olive 14% alcohol. the small import firm Uncorked. “A lot
oil and single-malt Scotch. The tariffs of people thought things would work
On Dec. 2, in retaliation for France’s digital-services tax on large
covered all wines from France, Spain, out by the end of the year.”
technology firms, the White House proposed a 100% tariff on
Germany and the U.K., except for spar- A 100% tariff, if implemented, would
French sparkling wines. A final decision on whether to impose
kling wines, wines with over 14% alco- be much worse. “Small and medium-
the tariff could come in mid-January.
hol and large-format bottles. sized importers don’t have the cash to

On Dec. 1, the WTO rejected an EU On Dec. 10, the U.S. Trade Representative announced a review of pay the tax,” said Jean-Louis Carbon-
appeal. The USTR responded by ratch- the October tariffs and proposed raising them to a 100% duty on nier, who handles U.S. communica-
eting up the pressure. It posted addi- all European wines. Public comments on the proposal are being tions for Château Palmer. “Importers
tional measures under consideration: accepted until Jan. 13. pay their suppliers over a 60- to 90-day
100% tariffs on a wide range of food and
period. But they have to pay the tariffs
BALINT PORNECZI/BLOOMBERG VIA GETTY IMAGES like the previous round, these tariffs would hit wines from every EU na- will pass along to consumers. Ultimately, though, consumers will have
other products from all EU nations. Un-
when the wine clears customs.”
It’s up to wineries and importers to decide how much of the cost they
tion and would include sparkling wines, dessert wines, wines in large-for-
mat bottles and wines at all alcohol levels, not just those under 14%. to pay. “The people most hurt will be the consumers,” said LeDrew. That

(These are unrelated to a 100% duty on French sparkling wine that Trump raises the fear that people will find alternatives to European wines—
and perhaps all wine—at a time when there is more competition from
has threatened in response to France’s tax on large digital companies.)
The reaction from many in the industry has been shock. “The level other drinks. “When will those consumers come back?” adds LeDrew.
of 100%, in my opinion, will be really devastating, as all the European “Will they come back?”

JAN. 31 - FEB. 29, 2020 • WINE SPECTATOR 17