On Friday, the European Union and United States announced a four-month suspension of mutual tariffs related to a 2004 dispute over large civilian aircraft. The news came as a relief to the U.S. wine industry, which had been caught in the crossfire the last 18 months.
“The news is thrilling. There’s no other word,” says Ben Aneff, president of the United States Wine Trade Alliance. “We’re absolutely thrilled that [the Biden administration] listened and that they reacted so quickly.”
This coincides with the suspension of tariffs on U.K. goods like single-malt whiskey and cheese, another recent casualty of the decades-old trade dispute over aerospace giants Airbus and Boeing.
“The news is thrilling. There’s no other word.”—Ben Aneff, United States Wine Trade Alliance
In 2019, the World Trade Organization (WTO) ruled that the E.U. had illegally subsidized Airbus and allowed the U.S. to levy $7.5 billion in punitive tariffs. In response, later that year, the United States Trade Representative (USTR) levied 25% tariffs on all still wines under 14% alcohol from France, Germany, Spain and England, in addition to certain other goods.
Last November, in another long-expected announcement, the WTO ruled that the U.S. had similarly illegally subsidized its own Boeing. That allowed the E.U. to impose $4 billion in tariffs on U.S. goods. In response to those tariffs, late last year the USTR abruptly extended the 25% tariffs to still wines above 14% alcohol from France and Germany, escalating the trade war between former long-standing allies.
The timing of the tariffs could not have been worse, with the pandemic already devastating many U.S. restaurants, distributors and retailers. Today’s suspension of the tariffs lifts that burden.
“It’s certainly a huge relief for our customers and for our business,” says Daniel Posner, owner of Grapes The Wine Company, a retail store in White Plains, New York. “Our bread is buttered with Bordeaux and Burgundy. We can sell those wines freely again without worrying about potential impacts of what we have to pay the U.S. government for the privilege to do so.”
“The industry has been devastated… Refund and reverse all of the tariffs, at the very least for what was on the water when the tariffs were put in place.”—Erik Segelbaum, Somlyay
While the suspension lasts four months, Aneff expects the tariffs will eventually be permanently lifted.
“Both sides understand at this point how damaging these tariffs are,” says Aneff. “We believe this timeframe was effectively designed because both the U.S. and E.U. believe they’re far enough along in negotiations, that [four months] will allow them to put this issue to bed.”
Even if the tariffs on wine are permanently lifted, however, some of their effects will remain.
“The industry has been devastated,” says Erik Segelbaum, founder of Somlyay, a wine service and hospitality consulting company based in Washington, D.C. “The right thing to do is to immediately suspend tariffs on all wine and liquor, number one. Number two, refund and reverse all of the tariffs, at the very least for what was on the water when the tariffs were put in place. Number three, they need to pass a restaurant stimulus bill. Until those three things happen, the tariffs will have an amplified effect.”
Aneff believes that compensation for the U.S. business owners who had to pay tens to hundreds of thousands of dollars for wine that was in transit when the tariffs were imposed is likely.
“There is bipartisan support for it. Getting any bill passed through Congress is very difficult, but without a doubt, there will be a major push,” he says.
For now, however, many are simply relieved the wine industry will no longer being stuck paying the bill for an international aerospace industry dispute.
“The announcement is going to bring relief to tens of thousands of wine importers and distributors and retailers and millions of restaurants around the United States,” says Aneff. “It’s a real win for businesses and consumers all over the country.”
Published: March 6, 2021