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Wine Spectator: Old World Wine Is About To Get Much More Expensive

October 21, 2019

Starting Friday, the U.S. imposed 25% tariffs on many wines from France, Spain, Germany, and the U.K., as well as dozens of other European products, from Scotch and Irish single malt whiskies, to Italian cheeses and olive oil, to Greek yogurt. The tariffs went into effect just after midnight October 18, after talks between European officials and U.S. trade representatives failed. The trade dispute between the U.S. and E.U. stems from a long-running battle over aircraft subsidies.

Wineries and importers are baffled and furious. They say the tariffs are so large that they will have no choice but to pass along at least some of the cost to American consumers, though they may cut profit margins to try to minimize the price increases. They expect to lose sales and suffer financially until the trade dispute is settled and they fear that they may lose customers for years to come.

The U.S. imported 31.2 million cases of wine from the four targeted countries in 2018, according to Impact Databank. France in particular has enjoyed strong gains in the U.S. market in recent years, with bottled table wine shipments expanding by roughly 5 million cases since 2013, reaching 14.4 million cases in 2018. Italy, which remains the largest imported wine category in the U.S. by far at 27 million cases, has been spared the tariff burden for now.

The administration has not explained how it chose the products on the list and why the airplane industry is facing 10% tariffs while wine faces 25%. The government has not explained why only wine under 14% abv is being targeted, either. Until recently, wine under 14% was considered table wine while wine over that was considered dessert wine and taxed at a higher rate. But the 2017 tax bill changed the level to 16%.

“The costs will be borne at all levels of the trade—producer, importer, distributor, retailer, restaurateur, and by consumers too,” said Martin Sinkoff, former vice president at importer Frederick Wildman & Sons, who now works as a consultant. “Consumers can expect to pay 20% to 30% more for the same wines they buy now.” Wine Spectator has a full report.—Mitch Frank

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