Adam Arlen’s first article on Tariffs on European Wine Could Have a Major Impact on American Wallets was published in December 2019. —EH Stafford, Managing Editor
If you haven’t been keeping up with the current beverage news, I will recap the last few months for you. In October 2019, the United States Trade Representative announced the possibility of 100% tariffs on Champagne in response to the Digital Services Tax after implementing 25% tariffs on French and Spanish wine under 14% alcohol by volume in containers under 2 liters along with Scotch from the United Kingdom. This set was put in place after the World Trade Organization ruled that Airbus was illegally subsidized by the European Union.
The possibility of a new round of tariffs
In December 2019 the US Trade Representative announced the possibility of a new round of tariffs up to 100% on ALL wine from the European Union, with no exceptions. The rationale was that wine is a commodity that can easily be replaced by a bottle of wine made from the same grape in the United States. This is not even close to the truth. Pinot Noir from California can not and will not replace Burgundy. The United States can not produce enough wine to satisfy the consumption volume of this thirsty country.
Testifying before Congress
In early January, many industry professionals and trade association representatives testified before Congress and the USTR office and presented the facts of the industry. Many had no idea how the 3-tier system works for the distribution of beverage alcohol. Many of the larger importers were able to negotiate with their suppliers and split the tariff increase with no effect on the final consumer price. Smaller importers and suppliers were not so lucky.
No new tariffs … for now
Thankfully, last week the USTR announced there will be no new tariffs on wine from the European Union for now. The National Association of Wine Retailers and the US Wine Trade Alliance spent a lot of time on Capital Hill, speaking with lawmakers and trade representatives breaking down how the beverage alcohol trade actually works. Those tariffs on all EU wines will directly affect American jobs not just in the distribution trade, but also logistics and transportation to the tune of almost 80,000 jobs potentially lost. While we in the industry breathed a collective sigh of relief, we can not relax until the situation is completely resolved with Airbus, Boeing and the WTO.
Adam Arlen: “I am passionate about wine because it is history in a bottle.” He is the sommelier for The Peninsula Club in Cornelius, NC. Originally from Allentown, PA, he believes you should always branch out and find new things. His goal is to never stop learning and continuing to grow both personally and professionally. A fun fact about him: “I was a nuclear engineer on a submarine in a previous life.”
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