The U.S. government has paused the tariffs on most French, Spanish and German wines, bringing economic relief to European winemakers, American merchants and wine consumers, at least for four months. The suspension, announced by the Office of the United States Trade Representative today, is intended to ratchet down tensions as the U.S. and European Union negotiate a solution to a long fight over government aid to airplane manufacturers.
"The European Union and the United States today agreed on the mutual suspension for four months of the tariffs related to the World Trade Organization (WTO) Aircraft disputes," said Katherine Tai, U.S. Trade Representative, in a statement. "The suspension will cover all tariffs both on aircraft as well as on non-aircraft products, and will become effective as soon as the internal procedures on both sides are completed. This will allow the E.U. and the U.S. to ease the burden on their industries and workers and focus efforts toward resolving these long running disputes at the WTO."
"This is absolutely thrilling news," said Ben Aneff, president of the U.S. Wine Trade Alliance (USWTA) and managing partner at Tribeca Wine Merchants. "Suspending these tariffs will bring tremendous relief to millions of small businesses around the country."
The dispute over government aid to Airbus and Boeing stretches back more than 15 years. The Trump Administration took the battle to a new level, imposing 25 percent tariffs in October 2019 on wines under 14 percent alcohol from France, Spain and Germany. When the European Union imposed its own tariffs late last year over the Boeing dispute on a wide range of American products, including orange juice, ketchup and tractors, the White House retaliated in January by extending the tariffs to French and German wines over 14 percent alcohol too. (Airplane parts, oddly enough, face 15 percent tariffs.)
While the battle has raged, European wine exports to the U.S. have fallen dramatically. According to the U.S. International Trade Commission, imports of French wine from January to June of 2020 were down more than 50 percent compared to the same period last year. Spanish wine imports were down 60 percent.
But the tariffs have also meant economic pain for American importers and retailers, at a time when the pandemic has made business hard enough. "These tariffs have done significantly more damage to U.S. small businesses than their targets overseas," said Aneff. In the end, American consumers pay the increased cost of the wines.
The pause is not a full stop. It simply halts them while the Biden administration negotiates with its European counterparts on a final agreement to end the fight. It's unclear what the financial terms of a settlement may look like, and there's no guarantee they will be able to find common ground in four months. But for now, importers and wine consumers can breathe a little easier.
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