The administration held off, but under U.S. trade law, tariffs are reconsidered every 180 days, and here we are, déja vù all over again. Meanwhile, we’ve had the coronavirus pandemic with its severe impact on restaurants and the importers, distributors and wineries who sell to them. If that wasn’t a heavy enough blow, tariff increases now could be especially harsh and detrimental to already reeling small businesses.
Wine lovers dodged a bullet this month, when the Office of the U.S. Trade Representative left French sparkling wine, including champagne, and cheese off a list of products slapped with new tariffs in retaliation for the digital services tax. The administration opted to impose 25 percent tariff hikes on $1.3 billion worth of cosmetics, soaps and handbags, products not likely in high demand while most of the country is in isolation. Even these tariffs were deferred for 180 days, until January. In leaving sparkling wine and cheese off the list, the USTR acknowledged that it had “considered public comments” and the advice of advisory committees.
But that wasn’t the biggie. Last month, the USTR reopened consideration of tariffs over the Airbus subsidies, a case the United States won in the World Trade Organization. Having hiked duties 25 percent on some European wines last October, the administration is once again contemplating 100 percent tariffs on a broad array of E.U. products, including wine. Public comments are being accepted through July 26.
The good news: The USTR’s notice seeks public comment on “whether specific products of current or former EU member states should remain on or be removed from the list,” as well as whether duties should be increased.
The wine industry is taking no chances, even if the outcry is not as vocal as it was in December and January.
“We take the threat extremely seriously,” says Ben Aneff, head of the U.S. Wine Trade Alliance. He expressed concern that policymakers still see the tariffs as benefiting American wineries, even though they are “entirely dependent on healthy U.S. distributors for access to market.”
The Wine Trade Alliance has set up a website, Endwinetariffs.com, to help people submit comments to the USTR or to members of Congress in opposition to the tariff hikes.
The Wine and Spirits Wholesalers of America, a powerful lobbying organization, has also opposed new tariffs since before the pandemic, organization president Michelle Korsmo said in a statement. “But now, at a time when the hospitality industry is fighting for its life, any additional tariffs will have catastrophic and compounding effects for years to come — a knockout blow for many,” she said.
Comments already posted on the USTR site are overwhelmingly against higher tariffs on European wines. Many of them cite the impact the pandemic has already had on the hospitality industry.
“The hospitality industry cannot take any more blows,” wrote Trevor Gorham of Vino Veritas Wine Bar + Bottle Shop in Portland, Ore. “While many businesses are still closed or permanently closed to this pandemic, many more will shut down if this proposed tariff increase passes.”
Additional tariffs on European wines don’t make sense, especially now when the domestic industry is reeling. But nothing makes sense these days. This month’s decision over the French digital services tax may be a favorable sign that the administration realizes the self-inflicted harm that could result from higher taxes. We’ll know if that has sunk in when the USTR announces its decision in early August.
But even if wine lovers can raise a celebratory toast then, there are still other dark clouds looming over digital service taxes proposed in Italy and Austria. Wine is an important export for Europe, and it will always be a convenient target in trade disputes.
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