US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

[Jeff Leve]

I'm not familiar how tariffs impact in bond wine - I can see an argument both ways, e.g. you pay the tariff on entry intto the country, so you'd pay a tariff on in bond wine. At the same time, the argument is meant to apply to duty as well, and that you don't pay in bond.

Anyone know for sure?

You pay a tariff on the cost of the wine. There is no duty to pay as the wines are exported from the UK.

[HenryB]

I'm not familiar how tariffs impact in bond wine - I can see an argument both ways, e.g. you pay the tariff on entry intto the country, so you'd pay a tariff on in bond wine. At the same time, the argument is meant to apply to duty as well, and that you don't pay in bond.

Anyone know for sure?

You pay a tariff on the cost of the wine. There is no duty to pay as the wines are exported from the UK.

I think you've slightly missed my point tbh

If the UK were to implement tariffs on wine, would those tariffs be paid upon entry into the country (in bond warehouse), or upon delivery (much like duty & VAT currently are)?

I can see arguments both ways, its unclear to me which is correct

[John Morris]

The whole point of bonded warehouses and free trade zones is to allow goods to remain there free of duties, taxes and tariffs if they are eventually exported, so I can't imagine that they'd charge tariffs if they aren't collecting duties and VAT.

[D@ve D y r 0 f f]

I'm not familiar how tariffs impact in bond wine - I can see an argument both ways, e.g. you pay the tariff on entry intto the country, so you'd pay a tariff on in bond wine. At the same time, the argument is meant to apply to duty as well, and that you don't pay in bond.

Anyone know for sure?

You pay a tariff on the cost of the wine. There is no duty to pay as the wines are exported from the UK.

I think you've slightly missed my point tbh

If the UK were to implement tariffs on wine, would those tariffs be paid upon entry into the country (in bond warehouse), or upon delivery (much like duty & VAT currently are)?

I can see arguments both ways, its unclear to me which is correct

I believe tariff and duty are the same thing (or effectively the same thing). So a tariff would just be an increase in the amount of duty, and would be paid at the same time and under the same conditions as duty is now. Caveat - I'm neither a Brit nor a tariff expert, so this opinion is worth no more than double what you paid for it.

[AndrewH]

^ Not sure what any of this has to do with US tariffs, but as we're on the subject, I do wonder also if by having wine in bond, holders run the risk of tariffs on wine that didn't exist at the time of purchase once they choose to take their wine out of bond. I believe with UK in EU there were no tariffs on any wines imported . . .

[D@ve D y r 0 f f]

^ Not sure what any of this has to do with US tariffs, but as we're on the subject, I do wonder also if by having wine in bond, holders run the risk of tariffs on wine that didn't exist at the time of purchase once they choose to take their wine out of bond. I believe with UK in EU there were no tariffs on any wines imported . . .

I would have to imagine that the answer is yes, you take the risk of whatever the duty/tariff is at the time you take the wines out of bond. Of course, if the wines are already in London and "in-bond," you'll have sufficient notice (one would think) to "import" anything you want before the new rates would kick in, if an increase is ever announced.

[HenryB]

John, Dave, thanks for the opinion. I just wasnt entirely sure. I can see the argument that its coupled with duty and thus tariffs are paid on delivery out of bond.

Andrew - it isnt directly related to the US tariff question, but there is the whole Brexit thing at the minute that could, until a trade deal is agreed, everything is up in the air

[Jason T]

^ Not sure what any of this has to do with US tariffs, but as we're on the subject, I do wonder also if by having wine in bond, holders run the risk of tariffs on wine that didn't exist at the time of purchase once they choose to take their wine out of bond. I believe with UK in EU there were no tariffs on any wines imported . . .

I would have to imagine that the answer is yes, you take the risk of whatever the duty/tariff is at the time you take the wines out of bond. Of course, if the wines are already in London and "in-bond," you'll have sufficient notice (one would think) to "import" anything you want before the new rates would kick in, if an increase is ever announced.

Though it could still be quite inconvenient. For example in my case I leave a lot of wine in bond as it’s quite cheap storage and I have space constraints in my current house. No point in taking delivery on something I don’t intent to drink for 5-10 years.

[D@ve D y r 0 f f]

^ Not sure what any of this has to do with US tariffs, but as we're on the subject, I do wonder also if by having wine in bond, holders run the risk of tariffs on wine that didn't exist at the time of purchase once they choose to take their wine out of bond. I believe with UK in EU there were no tariffs on any wines imported . . .

I would have to imagine that the answer is yes, you take the risk of whatever the duty/tariff is at the time you take the wines out of bond. Of course, if the wines are already in London and "in-bond," you'll have sufficient notice (one would think) to "import" anything you want before the new rates would kick in, if an increase is ever announced.

Though it could still be quite inconvenient. For example in my case I leave a lot of wine in bond as it’s quite cheap storage and I have space constraints in my current house. No point in taking delivery on something I don’t intent to drink for 5-10 years.

Obviously the cost of paying now instead of later would be a significant issue, but don’t most storage providers offer both in-bond and duty-paid storage? So you could “import” the wine out of in-bond storage without taking physical delivery at home?

[Mark Golodetz]

I am doing it the other way round. I am keeping my wine in bond in the UK, until the tariffs are gone. I would be paying storage here anyway, it is more expensive in the UK, but it would take me 15 years before the extra cost of storage is higher than the tariff.

[HenryB]

bear in mind UK in bond storage includes replacement insurance suddenly the costs dont look so much worse.

[John Morris]

I would have to imagine that the answer is yes, you take the risk of whatever the duty/tariff is at the time you take the wines out of bond. Of course, if the wines are already in London and "in-bond," you'll have sufficient notice (one would think) to "import" anything you want before the new rates would kick in, if an increase is ever announced.

Though it could still be quite inconvenient. For example in my case I leave a lot of wine in bond as it’s quite cheap storage and I have space constraints in my current house. No point in taking delivery on something I don’t intent to drink for 5-10 years.

Obviously the cost of paying now instead of later would be a significant issue, but don’t most storage providers offer both in-bond and duty-paid storage? So you could “import” the wine out of in-bond storage without taking physical delivery at home?

In the UK, taking it out of in-bond storage would trigger the 20% VAT (sales) tax, I believe. I suppose you might be able to reclaim that if you later export it, but that would be a big up-front cost to avoid any possible UK tariff/duty on wine imports.

[D@ve D y r 0 f f]

In the UK, taking it out of in-bond storage would trigger the 20% VAT (sales) tax, I believe. I suppose you might be able to reclaim that if you later export it, but that would be a big up-front cost to avoid any possible UK tariff/duty on wine imports.

We're talking about making the best of a hypothetical bad situation here, if the UK imposes a tariff on EU wine. So obviously no response is pain-free.

For those who store in the UK (in bond) but live elsewhere, the UK tariff should be irrelevant, right? They will export from in-bond status whenever the time is right, and never pay any UK VAT or duty/tariff. So this doesn't really apply to them, as I see it.

For those who live in the UK and eventually want to drink the wine, they will have to pay the then-current VAT and duty/tariff at whatever time they take the delivery of the wine (or move it from in-bond to duty-paid storage). Even now, those folks don't get to avoid VAT and duty/tariff (on the wines they ultimately drink rather than sell), they just get to defer those costs. So if the UK announced a new tariff, and gave 30 days' advance warning, they could choose to pay the current VAT and duty/tariff now (by taking delivery or moving from in-bond to duty-paid storage) rather than the higher combination of VAT and duty/tariff later, with relatively few logistical obstacles. They'd have to balance out the time value of money, how likely they think the new tariff is to last (or increase/decrease in the future), etc., of course, but if they think it's to their benefit, it's relatively feasible. My original point was that having the wine already in London (in-bond) gives them much more flexibility than anyone has on wine that is not yet in their home country. For example, and by contrast, if a new US tariff is announced with 30 days' notice or the like, a distributor in the US who wants to bring a container of wine in from France may not be able to consolidate, ship, and get the wine through US customs before the tariff goes into effect, at least not without significant increased costs (air freight, for example).

Of course, we'd all prefer if there just weren't any tariffs to begin with.

[HenryB]

so what ivel earned frmo this thread is for jan, i need to make sure i hav enough cash on hand to pay VAT on any wines I might drink in the next 5/10 years Fortunately that's a horzion that covers maybe 30% of my portfolio (by value, rather than volume)!

[John Morris]

Dave - Just to be sure I understand, you're suggesting that Americans with wine in bond in the UK might take it out of bond now to avoid any new UK tariffs, but leave it in the UK to avoid the US tariffs, even if that means paying VAT for the time being.

That was beginning to make sense to me... until I looked up the UK VAT refund rules. It seems that you have to apply within three months of purchase (which I assume equates to coming out of bond), and it seems very unlikely the US tariffs will go away in that time.

Bottom line: It's probably better to leave it in bond and pray the US tariffs go away eventually.

The political risk calculations are pretty hard to calculate: Will the UK impose new tariffs on EU wines and, if so, when and at what rate? Will the US rescind the 25% tariff and, of so, when? Will the US impose additional tariffs?

[AndrewH]

The political risk calculations are pretty hard to calculate: Will the UK impose new tariffs on EU wines and, if so, when and at what rate? Will the US rescind the 25% tariff and, of so, when? Will the US impose additional tariffs?

BTW, is there some meaningful prospect that the UK will impose significant tariffs on EU wine imports? Best I can find is that a modest tariff (the global rate UK charges) will go into effect in a couple of years.

https://imbibe.com/news/new-tariff-regi ... er-brexit/

The max appears to be £26/hl, which is 26p/litre or 20p/bottle. An about 7p for still wine. Is my math off or is this close to irrelevant?

[D@ve D y r 0 f f]

Dave - Just to be sure I understand, you're suggesting that Americans with wine in bond in the UK might take it out of bond now to avoid any new UK tariffs, but leave it in the UK to avoid the US tariffs, even if that means paying VAT for the time being.

No, I was suggesting that for anyone other than UK residents, the potential of new UK tariffs should be irrelevant even if they have wine stored in the UK (presuming it is stored in-bond), because they will presumably export it from the UK to their home country directly from its in-bond status, and the UK VAT/duty/tariff will be irrelevant.

But Henry was asking about UK residents who have wine in-bond and whether any potential new tariff would apply to their wines when it came time to take delivery, even though this hypothetical tariff was not in effect when the wines physically entered the UK via the in-bond warehouse. Those are the folks I was suggesting would want to do the political risk/time value of money calculation and consider moving wine from in-bond to duty-paid status, at least once a tariff is announced (if ever), but before it goes into effect.

[HenryB]

what would be the default WTO wine tariff on french wine if there is a no-deal brexit? I always hear the very broad figure of 25% tariffs on most products, but no idea if wine is under that category.

[D@ve D y r 0 f f]

what would be the default WTO wine tariff on french wine if there is a no-deal brexit? I always hear the very broad figure of 25% tariffs on most products, but no idea if wine is under that category.

Others know much more about this stuff than I do, but as I understand it the WTO wouldn't have a role here. The WTO doesn't impose tariffs. The WTO does resolve trade disputes and sometimes as a remedy/punishment in a trade dispute it allows member countries to impose certain tariffs that would otherwise violate its rules and the trade agreements in place, but I'm not aware of any existing trade dispute being before the WTO relating to a potential no-deal Brexit.

It is my understanding that if there is a no-deal Brexit, then it will be up to the UK and the EU each decide to do, either in terms of negotiating a trade deal, or imposing tariffs in the meantime. As for what the UK tariff on EU wine is likely to be in that instance, I haven't the foggiest.

As before, I stand willing and able to be corrected on all of this by those who really know what they're talking about.

[D@vid Bu3ker]

Others know much more about this stuff than I do, but as I understand it the WTO wouldn't have a role here. The WTO doesn't impose tariffs. The WTO does resolve trade disputes and sometimes as a remedy/punishment in a trade dispute it allows member countries to impose certain tariffs that would otherwise violate its rules and the trade agreements in place, but I'm not aware of any existing trade dispute being before the WTO relating to a potential no-deal Brexit.

It is my understanding that if there is a no-deal Brexit, then it will be up to the UK and the EU each decide to do, either in terms of negotiating a trade deal, or imposing tariffs in the meantime. As for what the UK tariff on EU wine is likely to be in that instance, I haven't the foggiest.

As before, I stand willing and able to be corrected on all of this by those who really know what they're talking about.

Yeah, the WTO does not set the tariff level, just that tariffs can be imposed on a certain dollar value of goods. It is up to the EU to decide the tariff percentage. If the tariffs are disproportionate the tariffed country could file a new suit with the WTO.

The Brexit situation is still a trade negotiation, not a dispute before the WTO. Better hope to does not get there, or it will mean there was no negotiated resolution, and virtually all UK/EU trade will be a complete mess for years.

[HenryB]

what would be the default WTO wine tariff on french wine if there is a no-deal brexit? I always hear the very broad figure of 25% tariffs on most products, but no idea if wine is under that category.

Others know much more about this stuff than I do, but as I understand it the WTO wouldn't have a role here. The WTO doesn't impose tariffs. The WTO does resolve trade disputes and sometimes as a remedy/punishment in a trade dispute it allows member countries to impose certain tariffs that would otherwise violate its rules and the trade agreements in place, but I'm not aware of any existing trade dispute being before the WTO relating to a potential no-deal Brexit.

It is my understanding that if there is a no-deal Brexit, then it will be up to the UK and the EU each decide to do, either in terms of negotiating a trade deal, or imposing tariffs in the meantime. As for what the UK tariff on EU wine is likely to be in that instance, I haven't the foggiest.

As before, I stand willing and able to be corrected on all of this by those who really know what they're talking about.

my understanding was that in lieu of a trade deal, there are default tariffs that would be imposed?

[D@ve D y r 0 f f]

my understanding was that in lieu of a trade deal, there are default tariffs that would be imposed?

If that's the case, it's beyond what little I know on all of this.

[D@vid Bu3ker]

what would be the default WTO wine tariff on french wine if there is a no-deal brexit? I always hear the very broad figure of 25% tariffs on most products, but no idea if wine is under that category.

Others know much more about this stuff than I do, but as I understand it the WTO wouldn't have a role here. The WTO doesn't impose tariffs. The WTO does resolve trade disputes and sometimes as a remedy/punishment in a trade dispute it allows member countries to impose certain tariffs that would otherwise violate its rules and the trade agreements in place, but I'm not aware of any existing trade dispute being before the WTO relating to a potential no-deal Brexit.

It is my understanding that if there is a no-deal Brexit, then it will be up to the UK and the EU each decide to do, either in terms of negotiating a trade deal, or imposing tariffs in the meantime. As for what the UK tariff on EU wine is likely to be in that instance, I haven't the foggiest.

As before, I stand willing and able to be corrected on all of this by those who really know what they're talking about.

my understanding was that in lieu of a trade deal, there are default tariffs that would be imposed?

This article has some info:

https://www.bbc.com/news/uk-45112872

[AndrewH]

what would be the default WTO wine tariff on french wine if there is a no-deal brexit? I always hear the very broad figure of 25% tariffs on most products, but no idea if wine is under that category.

Others know much more about this stuff than I do, but as I understand it the WTO wouldn't have a role here. The WTO doesn't impose tariffs. The WTO does resolve trade disputes and sometimes as a remedy/punishment in a trade dispute it allows member countries to impose certain tariffs that would otherwise violate its rules and the trade agreements in place, but I'm not aware of any existing trade dispute being before the WTO relating to a potential no-deal Brexit.

It is my understanding that if there is a no-deal Brexit, then it will be up to the UK and the EU each decide to do, either in terms of negotiating a trade deal, or imposing tariffs in the meantime. As for what the UK tariff on EU wine is likely to be in that instance, I haven't the foggiest.

As before, I stand willing and able to be corrected on all of this by those who really know what they're talking about.

my understanding was that in lieu of a trade deal, there are default tariffs that would be imposed?

See my link above. They appear to be minuscule for wine.

[HenryB]

Brill thank you very much

[Nola Palomar]

Was this posted anywhere here? I know it's a few days ago and the news of yesterday is usually overshadowed by either COVID or the 2020 election, but this is an important read especially those of us here that are Importers and have to deal with these trade disputes that have NOTHING to do with us.

https://www.yahoo.com/news/robert-light ... 35733.html

[D@vid Bu3ker]

Was this posted anywhere here? I know it's a few days ago and the news of yesterday is usually overshadowed by either COVID or the 2020 election, but this is an important read especially those of us here that are Importers and have to deal with these trade disputes that have NOTHING to do with us.

https://www.yahoo.com/news/robert-light ... 35733.html

Had not seen that article. Thanks for posting it. Lighthizer is just another swamp creature.

[Michel Abood]

Was this posted anywhere here? I know it's a few days ago and the news of yesterday is usually overshadowed by either COVID or the 2020 election, but this is an important read especially those of us here that are Importers and have to deal with these trade disputes that have NOTHING to do with us.

https://www.yahoo.com/news/robert-light ... 35733.html

Very interesting piece on Lightizer.

[D@ve D y r 0 f f]

This doesn't say much, and it seems like more of a "we're right and you're wrong" way of saying "we want a deal," but the USA issued this statement and it hasn't been posted yet, so here it is, FWIW.

https://www.reuters.com/article/us-wto- ... WY_i0V6PqE

[Tom G l a s g o w]

This doesn't say much, and it seems like more of a "we're right and you're wrong" way of saying "we want a deal," but the USA issued this statement and it hasn't been posted yet, so here it is, FWIW.

https://www.reuters.com/article/us-wto- ... WY_i0V6PqE

I’ve no idea what this means, other than a last second offer of settlement before an election to make the offerer (Usa) look good.
No deal prior to the election.
Crazy, I’ve seen this move before.. makes one wonder what competitive position Boeing is in.

[D@ve D y r 0 f f]

I don't view it as an offer of settlement. I view it as pre-negotiation posturing from someone who has the upper hand, or believes he has the upper hand, or wants his opponent to think that he believes he has the upper hand. But it's better than "we have no interest in a deal."

[Tom G l a s g o w]

I don't view it as an offer of settlement. I view it as pre-negotiation posturing from someone who has the upper hand, or believes he has the upper hand, or wants his opponent to think that he believes he has the upper hand. But it's better than "we have no interest in a deal."

if it’s not a offer of a settlement, what the hell is it?

[D@vid Bu3ker]

I don't view it as an offer of settlement. I view it as pre-negotiation posturing from someone who has the upper hand, or believes he has the upper hand, or wants his opponent to think that he believes he has the upper hand. But it's better than "we have no interest in a deal."

if it’s not a offer of a settlement, what the hell is it?

It’s nothing more than posturing, as Dave said.

[D@ve D y r 0 f f]

It’s pre-negotiation posturing. An “offer of settlement” requires terms. As in “I’ll give you $5,000 for your car.” This had no terms. This was a statement of desire for a settlement (as in “I’d like to buy your car”), coupled with statements of “we’re bummed you did a bad thing” and “we need to resolve the issue of the outrageous subsidies you provided to Airbus,” which come from the “chest-thumping” chapter of the playbook. In other words “we should resolve this dispute with a deal based on you admitting you’re wrong and we’re right, and thus you caving on the deal terms.”

That’s my interpretation, anyway.

[D@vid Bu3ker]

Given that the statement only referred to the “massive launch aid” for Airbus, it’s clearly posturing.

[Travis Fantz]

I don't have the bandwith to read over the last 5-10 pages. Could someone summarize the current state within these parameters? If an importer is receiving wine today or in the last month, do or did they have to pay tariffs? I am asking because I felt like I have purchased wine over the last 6 months that at times notated that part of the cost of a tariff.

Thanks in advance.

[D@ve D y r 0 f f]

I don't have the bandwith to read over the last 5-10 pages. Could someone summarize the current state within these parameters? If an importer is receiving wine today or in the last month, do or did they have to pay tariffs? I am asking because I felt like I have purchased wine over the last 6 months that at times notated that part of the cost of a tariff.

Thanks in advance.

Yes, the tariff paid is the tariff in effect when the wine enters the country.

[Travis Fantz]

Is there a tariff in place right now?

[D@vid Bu3ker]

Is there a tariff in place right now?

For many wines coming into the US, yes.

[Michel Abood]

Is there a tariff in place right now?

I just paid $15,000 last week to someone at Customs, so yeah there are f*****g tariffs in place.

[Barry L i p t o n]

Posted in wrong thread, sorry

[Nola Palomar]

Is there a tariff in place right now?

I just paid $15,000 last week to someone at Customs, so yeah there are f*****g tariffs in place.

This has got to stop.

[MitchTallan]

I think it is likely that the tariff on French wines tied to French subsidy of Airbus will go "poof"

[D@vid Bu3ker]

I think it is likely that the tariff on French wines tied to French subsidy of Airbus will go "poof"

Don’t be so confident. In any event it will have to go through the Federal Register process, and there are significant, entrenched interests that will fight to continue the tariffs.

I am hopeful there will be a negotiated end to the tariffs, but it won’t be instantaneous.

[Neal.Mollen]

I think it is likely that the tariff on French wines tied to French subsidy of Airbus will go "poof"

Don’t be so confident. In any event it will have to go through the Federal Register process, and there are significant, entrenched interests that will fight to continue the tariffs.

I am hopeful there will be a negotiated end to the tariffs, but it won’t be instantaneous.

The "to-do" list in going to be unbelievably long on 1/20. First thing on the docket will be a flurry of executive orders reversing a bunch of recently issued executive orders. Rulemaking takes time and really can't begin until the agencies are staffed. And the civil service and rank and file have been decimated over the last, um, few years; that will have to be addressed too. I would not expect anything that requires notice and comment to change until next fall at the very earliest.

[D@vid Bu3ker]

I think it is likely that the tariff on French wines tied to French subsidy of Airbus will go "poof"

Don’t be so confident. In any event it will have to go through the Federal Register process, and there are significant, entrenched interests that will fight to continue the tariffs.

I am hopeful there will be a negotiated end to the tariffs, but it won’t be instantaneous.

The "to-do" list in going to be unbelievably long on 1/20. First thing on the docket will be a flurry of executive orders reversing a bunch of recently issued executive orders. Rulemaking takes time and really can't begin until the agencies are staffed. And the civil service and rank and file have been decimated over the last, um, few years; that will have to be addressed too. I would not expect anything that requires notice and comment to change until next fall at the very earliest.

Step 1 is a new US Trade Representative. Lighthizer has to go, and of course will.

[D@ve D y r 0 f f]

My understanding is that this tariff is not part of the general pro-tariff "Trade wars are good and easy to win" philosophy of the outgoing administration. Rather, this tariff is part of an ongoing trade dispute revolving around Boeing and Airbus. I believe that the dispute predates the outgoing administration and the tariff was only imposed during that administration because that's when the WTO finally entered the ruling against the EU, which allowed the tariffs as a penalty.

Thus, I have zero optimism that this particular tariff will be swept away as part of any general change in approach to tariffs that may accompany the incoming administration. Maybe we can convince them to "rotate" it on to other goods or something, but it's going to be around in one form or another until the underlying dispute is resolved. I have some modest hope that the incoming administration may make more effort and/or be more successful at reaching such a resolution, so there is that.

[D@vid Bu3ker]

My understanding is that this tariff is not part of the general pro-tariff "Trade wars are good and easy to win" philosophy of the outgoing administration. Rather, this tariff is part of an ongoing trade dispute revolving around Boeing and Airbus. I believe that the dispute predates the outgoing administration and the tariff was only imposed during that administration because that's when the WTO finally entered the ruling against the EU, which allowed the tariffs as a penalty.

Thus, I have zero optimism that this particular tariff will be swept away as part of any general change in approach to tariffs that may accompany the incoming administration. Maybe we can convince them to "rotate" it on to other goods or something, but it's going to be around in one form or another until the underlying dispute is resolved. I have some modest hope that the incoming administration may make more effort and/or be more successful at reaching such a resolution, so there is that.

Exactly. An administration that is more open to constructive negotiations may help resolution, but it will not be some immediate action.

[Dan Kravitz]

I sent a message to my suppliers in Spain and France stating my opinion that any changes in tariffs before the 2nd half of 2021 are extremely unlikely. Summer is unlikely, fall quite possible but this could stretch into early 2022.

Dan Kravitz

[Michel Abood]

I sent a message to my suppliers in Spain and France stating my opinion that any changes in tariffs before the 2nd half of 2021 are extremely unlikely. Summer is unlikely, fall quite possible but this could stretch into early 2022.

Dan Kravitz

Completely agree. They'll use it as a bargaining chip, once they get up to speed, but I doubt they'll have time to replace the outgoing administration's negotiating team in time for any meaningful movement before the carousel comes around in mid-February. And like Dan, I have informed my suppliers that I fully expect it to go on for an annoyingly long time.