January 20, 4:00pm CST
Just hours ago news headlines flooded my social media that an agreement has been reached over the French Digital Service Tax through 2020.
I am thrilled to hear that the sparring between France and the U.S. has come to a halt for now, but this is only part of the wine tariff war: there are two tariffs of which the wine industry is caught in the crossfire, and the other still stands to cause catastrophic damage.
Tariff 1: The Airbus-Boeing Battle [Status: PENDING REVIEW FOR EXPANSION]
Rewind to October of 2019: a tariff was imposed in response to—pardon my French, so to speak—a pissing match between two aerospace manufacturers: E.U.-based Airbus and U.S.-based Boeing. This dispute hails back to the mid-1990’s, so I’ll spare you a lengthy synopsis on this 30 year war that started almost before I was old enough to read, and refer you here for further information.
This tariff was imposed in October at 25% of the cost of the goods. The tariff is paid by the importer when goods arrive, penalizing many U.S. based import companies who have nothing to do with the dispute between the two airplane manufacturers. This cost increase is passed along through the 3-tier distribution chain (importer, wholesaler, retailer), and ultimately digs into consumer’s pockets.
The tariff is imposed on thousands of products including wine imported from select countries within the E.U. Click here for the full product list.
As of the last update to this post, this tariff is currently under review for expansion up to 100% of the cost of the goods, and to encompass *all* wines imported from *all* E.U. countries. Let me reiterate: the current imposition is only on select wines, from select countries, at 25%.
A decision on this tariff expansion is expected by mid-February, which is the timeline upon which the U.S. Trade Register is able to “carousel”, or add/remove, products from tariffed item lists. See below for “what you can do” to help take action against these tariffs.
Tariff 2: France’s Digital Service Tax [Status: CLOSED – for now]
The dispute that was agreed upon January 20, 2020 was in relation what the U.S. Trade Register determined was discrimination by the French, against U.S. digital companies.
This dispute was in response to a 3% tax France imposed on providers such as Amazon, Facebook and Google, which are paid by the U.S.-based tech companies. Click here for the full details.
In retaliation, the U.S. Trade Register threatened a 100% tariff on goods imported from France to the U.S.—such as sparkling wine and Champagne, among other items—which would have to be paid by the U.S.-based import companies who have nothing to do with the dispute. This cost increase would have been passed along through the 3-tier distribution chain (importer, wholesaler, retailer), and would ultimately have jabbed at consumer’s pockets, as well.
What you can do
Contact your Representative and urge them to contact the USTR.
- Talking points:
- Reference docket number USTR-2019-0003
- Remove wine entirely in the carousel for tariffed products
- E.U. wine tariffs are ineffective to the targets in Europe as we are replaceable as a trade partner
- Growing markets in Asia
- Brazil is on the verge of a new E.U. trade agreement that will remove tariffs and give Brazil’s 35 million wine drinkers access to E.U. wines
- Our imports account for only 15-20% of E.U. production
- These tariffs hurt American business more than Europeans.
- For every $100 of E.U. wine sold in the U.S., $85 goes to American businesses.
- Due to the three tier system, a single bottle of wine generates income for 3 American companies
- Wine should be removed during this carousel because the tariffs are ineffective against the E.U., and they hurt American owned businesses more than Europeans.
