decanter.com – US threatens to raise French wine tariffs ‘up to 100%’ – Chris Mercer, December 3, 2019
US trade officials said they were considering imposing import tariffs of “up to 100%” on certain French products, with a provisional list including “sparkling wine made from grapes” and many types of cheese, from Roquefort to Gruyère.
The proposal follows a finding that France’s new digital services tax discriminates against US tech companies, said the Office of the US Trade Representative (USTR).
If implemented, Champagne makers could potentially face even higher barriers to the fast-growing US market than many of the still wine producers who were hit by a new 25% import tariff in October.
However, it was not certain that new taxes would be introduced and proposals for retaliation against the French digital tax were open for public comments, said USTR.
Its comments came as president Donald Trump prepared to attend a NATO summit in London at which his French counterpart, Emmanuel Macron, will also be present. The pair were previously thought to have reached a truce over the digital services tax, at the G7 summit in August.
Separately, US officials have also raised the prospect of increasing or expanding the $7.5bn of tariffs imposed on a wide range of European products, from Burgundy wine to bed linen, as part of a long-running dispute with the EU over aerospace industry subsidies.
Still wines at 14% or below from France, Spain, Germany and the UK were hit by the 25% tariff as of 18 October.
USTR said this week that it had won a further ruling at the World Trade Organisation over illegal EU subsidies paid to Airbus.
‘In light of today’s report and the lack of progress in efforts to resolve this dispute, the United States is initiating a process to assess increasing the tariff rates and subjecting additional EU products to the tariffs.’
A list of products to be targeted would be published ‘later this week’, it added.
The USTR’s rhetoric will do little to reassure wine producers, merchants and consumers on both sides of the Atlantic that import tariffs will be short-lived.
While everyone in the trade has been hoping for a swift resolution, some also suspected that the tariffs were part of a longer-term repositioning of US trade policy.
Several analysts expected the tariffs to hit the availability of cheaper French, Spanish and German wines in the US, but there were early signs that fine wine trading has also been affected.
‘Since the tariffs were announced on 2 October, we have begun to see a change in regional market share,’ said Liv-ex on 26 November.
On the Liv-ex platform, it said, ‘Champagne and Italy [exempt from the 18 October tariffs] have taken 11% each of the total trade by value, compared to their 2018 annual averages of 8.6% and 8.1% respectively.’
The European Commission has called for a negotiated settlement in the aerospace dispute. In a parallel complaint, the WTO has also found the US guilty of illegally subsidising Boeing and the EU has sought permission with the global trade body to impose its own tariffs on US products.
European trade commissioner Cecilia Malström said in October, ‘The EU and US have both been found in breach of WTO rules. As the world’s largest aircraft manufacturers, the EU and the US have a joint responsibility to sit down and negotiate a settlement that is balanced and compliant with the WTO.’