A New bout of duties hitting US wine trade comes as setback to importers yet hope of a Biden overhaul remains
A further set of tariffs have been introduced by the outgoing Trump administration on wine imports from France and Germany, coming as a setback for burgeoning hopes the arrival of the Biden administration would repeal earlier measures.
The new fees will see still wine over 14 per cent ABV hit with a 25 per cent tariff rate for all shipments into the USA and are expected to predominantly affect French imports of stronger wines and cognac.
The charges come in addition to the previous 25 per cent rate added to all still wines of 14 per cent and below from France, Germany, Spain and the UK in 2019.
The new tariffs, which were levied at short notice and with no exemption for wine shipments already in transit to the US, are likely to have the biggest effect on American wine merchants and importers focusing on French wine, who had been hoping 2019’s tariffs would soon be repealed.
Paolo Battegazzore, CEO of Folio Fine Wine Partners, a wine importer based in Napa, California, told Goedhuis that, “Tariffs have reduced both the volume and number of wines imported, with some wines priced out of the market, resulting in reduced margins for producers, importers, and in some cases, distributors.”
The new tariffs, a fallout from the 16-year-old ongoing Airbus spat, have left beleaguered importers and merchants already reeling from 2019’s duties, with many feeling they are suffering repeatedly through no fault of their own.
“Our industry is collateral damage in trade disputes that have nothing to do with the agriculture or beverage alcohol sectors,” said Mr Battegazzore. “We believe that wine should not be targeted in retaliation in trade disputes involving products other than wine. Punishing the wine industry for trade is nonsensical.”
For buyers in the US, a likely impact will be a scarcity of wines no longer profitable to import, however it is hoped the buck will stop there, with companies striving to limit the disruption passed down to retail level. “Our own customers, buyers, consumers and collectors are not being heavily impacted by tariffs as we have attempted to absorb most of the impacts,” said Mr Battegazzore, “but this can only be held for so long.”
Exports of French wine from the UK to the US see the same challenge, with the tariffs placed on the product’s country of origin, causing concern amongst UK-based merchants moving wine between France and the USA.
There is, however, optimism amongst the trade that the arrival of President Joe Biden’s administration will see the tariffs reversed, but this is far from guaranteed. Ben Aneff, President of the US Wine Trade Alliance, said in a statement responding to the new bout of tariffs, “This is not the news we wanted to hear. But it underscores the necessity of the Biden administration to make changes to the tariff policies brought on by his predecessor, particularly those that do such disproportionate damage to U.S. businesses in this time of crisis.
The arrival of the Joe Biden administration brings hope of a softer stance on tariffs on the wine trade, but no guarantees have been made. Source: Wikimedia Commons
“We need to convince [then] President-elect Biden that tariff relief should be a major priority of his first few weeks in office, and this is no small task.
“While it is not a silver bullet for restaurants, [then] President-elect Biden can bring relief to huge numbers by repealing these tariffs, with no need to rely on Congress.”
Despite hopes for a quick fix with the incoming administration being somewhat subdued by Trump’s parting actions, attention must in the meantime shift to how best buyers and collectors can perpetuate business.
Despite little in the way of guarantees on behalf of the Biden administration, optimism regarding policy reversal remains high. While US-based importers will likely be forced to wait until policy-led support arrives, a solution for private buyers may come from storing wines under bond in the UK, which can then be shipped to the US once the now comprehensive 25 per cent tariff has been removed -- allowing overseas buyers to purchase and keep wine until the opportune moment to ship or sell.
For more information on UK wine storage, visit www.privatereservesltd.com