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News Alert: U.S. Holds Off On Further E.U. Wine And Spirits Tariffs For Now

February 14, 2020

The wine and spirits industry appears to have dodged a bullet today, with the U.S. Trade Representative (USTR) electing to hold off on further tariffs on European Union products for the time being.

In a closely watched decision, the USTR has opted to continue with its existing 25% tariffs on wines from France, Spain, and Germany as well as single malt whiskies from Scotland and Northern Ireland, but will not impose the 100% tariffs that it was considering on all E.U. wines, whiskies, Cognac, and liqueurs. The USTR raised the wider tariff threat in December in its ongoing battle with the E.U. over aircraft subsidies.

While the news could have been much worse, U.S. industry groups say they will continue to push for tariff-free trade between the E.U. and U.S. The WSWA stated, “Wine & Spirits Wholesalers of America remains strongly opposed to tariffs on European-origin wine and spirits, and urges the U.S. and E.U. trade officials to negotiate a deal to end this trade dispute that is leading to loss of revenue, hiring freezes and general uncertainty. These consequences will only compound the longer these tariffs remain in effect.”

Today’s move follows another piece of tariff news from recent weeks, in which the U.S. backed off a separate threat to impose 100% tariffs on French sparkling wines as retaliation for France’s tax on large global technology firms.

While the fears of the potentially devastating 100% tariffs on E.U. products have subsided for now, the existing 25% levies on French, Spanish, and German wines and single malts are already making a significant impact in the U.S. French Wine exports to the U.S. have plummeted 33% since the tariffs were imposed in October, according to the French federation of wine and spirit exporters (FEVS).

“The longer these disputes are unresolved, the greater the threat of even more tariffs on our industry,” the Distilled Spirits Council stated. “Specifically, the E.U. has stated it may impose retaliatory tariffs this spring on U.S. rum, vodka, and brandy in its parallel case at the WTO concerning Boeing. In addition, the E.U. is scheduled to increase its retaliatory tariff on American whiskey to 50% in Spring 2021.”

The U.S. Wine Trade Alliance added, “We applaud the administration on its restraint in not increasing or expanding the tariffs on European wine. Wine tariffs remaining at the status quo is a testament to the hard work put in by the wine industry, but it’s still a shallow victory. The administration’s refusal to remove the current 25% tariffs on select European wine will continue to hammer American business owners and consumers.”—Daniel Marsteller

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