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

[AndrewH]

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.

Yeah, that's my take as well. These aren't tariffs that will be eliminated on principle. But, given Trump's strong preferences for tariffs as a general matter, it seems that Biden will be more likely to negotiate a resolution than Trump would have been. But that still takes negotiation, with heavy input from Boeing and others to keep the pressure on the EU.

[Mark Golodetz]

WSJ just wrote this.

“It’s really going to be one of the few policy areas where [Mr.] Biden can show results and do so unilaterally,” said Scott Lincicome, a senior fellow at the Cato Institute and a longtime trade lawyer. “Because some of his signature policies are dead-on-arrival, he’s going to need to show progress elsewhere. That’s where trade and immigration will play a pretty prominent role.”

[Michael Bowden]

Not sure if this helps or hurts - https://www.forbes.com/sites/sarahhanse ... 9c58ac6b19

[Josh Grossman]

I assume tariffs are soon to disappear? Anyone holding off on buying until later Jan?

[Scott Jameson]

I assume tariffs are soon to disappear? Anyone holding off on buying until later Jan?

The recent posts indicate the tariffs are unlikely to disappear anytime soon. Some have mentioned next fall for a potential change but there's apparently no way things will change in Jan or the spring.

[Jeff_M.]

The article says this case is 16 years old. This pre-dates Trump and probably needs a lot more work to get the tariffs taken away.

[D@vid Bu3ker]

I assume tariffs are soon to disappear? Anyone holding off on buying until later Jan?

Sorry, but you are dead wrong.

[Douglas Breen]

Just saw on the news that the EU put a $4 billion dollar tariff due to US subsidizing Boeing. This will either lead a final resolution or things will get worse. Not good.

[D@ve D y r 0 f f]

The point we keep trying to make is that there really are two sets of tariffs here. One set is the one that gets all the general press - the wide-ranging tariffs that are part of the outgoing administration's general approach to trade and which have been imposed very much as a policy choice driven directly by that administration's philosophy, a philosophy likely to be very different in the incoming administration. If the new administration wants to take a different approach, then they may well sweep these away quickly, though of course since those tariffs have also drawn retaliation I would even there expect some negotiation to make sure that the retaliatory tariffs are going away too rather than some broad stroke on Jan. 22.

BUT THOSE ARE NOT THE WINE TARIFFS

The wine tariffs - the ones that get all the attention here - are part of a much older dispute about aircraft subsidies that is not at all linked to the outgoing administration's trade policy (or any one administration's trade policy), but rather is linked to the facts and outcome of that specific dispute. There is no reason to believe that a change in administration will lead to any quick or magic resolution to that dispute though, as discussed previously, it may lead to a different negotiation approach and/or a different carousel rotation, but neither of those is going to produce results in January.

[AndrewH]

Not sure if this helps or hurts - https://www.forbes.com/sites/sarahhanse ... 9c58ac6b19

It's not a surprise. It's the next step in the back and forth. Presumably the EU chose products that will have the maximum impact on key politicians' constituencies, so that they'll be given an incentive to push for resolution and removal of the tariffs. Not sure how wine, tobacco, frozen fish, and vegetables play, but assume that may have an effect on Alaska and certain southern states, and some farming states.

[Nola Palomar]

I am hoping for a reassignment of the tariffs toward the sector where they belong, Large Civil Aircraft, NOT wine, gourmet speciality foods, cheeses and ect.

[Scott AB]

Looks like there probably won't even be a trade representative in place in the new administration when the tariff's are next up for review in February so don't expect any changes until the Q3 review period and even then it might not be a priority.

https://www.wine-searcher.com/m/2020/11 ... e-tariffs

[D@vid Bu3ker]

Looks like there probably won't even be a trade representative in place in the new administration when the tariff's are next up for review in February so don't expect any changes until the Q3 review period and even then it might not be a priority.

https://www.wine-searcher.com/m/2020/11 ... e-tariffs

Not to mention that there is a certain process the USTR must undergo which is likely to be undermined.

[AndrewH]

Looks like there probably won't even be a trade representative in place in the new administration when the tariff's are next up for review in February so don't expect any changes until the Q3 review period and even then it might not be a priority.

https://www.wine-searcher.com/m/2020/11 ... e-tariffs

It's not necessary to have a confirmed USTR to make changes. Lighthizer wasn't confirmed until May 2017, but the General Counsel was installed in March and designated acting USTR. Quite often a career person is named USTR, and that person can act at the President's direction.

Not saying that there will be time to end tariffs by early February, but if Biden were to want to work out a deal quickly the absence of a confirmed USTR won't create an obstacle. Indeed, as the article notes, Biden could end the tariffs with a stroke of a pen.

[Jason Samansky]

I am following if the 2019 Boudreaux wine futures increase in price. My view was part of the rationale of offering them at a lower price point was to have the producer absorb some of the increase. I have not seen a spike in buying from the stores I have called (Total Wine, Wally's, and K&L). Not sure if anyone else has.

[Nola Palomar]

I am following if the 2019 Boudreaux wine futures increase in price. My view was part of the rationale of offering them at a lower price point was to have the producer absorb some of the increase. I have not seen a spike in buying from the stores I have called (Total Wine, Wally's, and K&L). Not sure if anyone else has.

Why would they reduce their prices? There are plenty of other sales channels for Bordeaux other than the US. China has developed a healthy taste for nice French wines.

[D@vid Bu3ker]

Looks like there probably won't even be a trade representative in place in the new administration when the tariff's are next up for review in February so don't expect any changes until the Q3 review period and even then it might not be a priority.

https://www.wine-searcher.com/m/2020/11 ... e-tariffs

It's not necessary to have a confirmed USTR to make changes. Lighthizer wasn't confirmed until May 2017, but the General Counsel was installed in March and designated acting USTR. Quite often a career person is named USTR, and that person can act at the President's direction.

Not saying that there will be time to end tariffs by early February, but if Biden were to want to work out a deal quickly the absence of a confirmed USTR won't create an obstacle. Indeed, as the article notes, Biden could end the tariffs with a stroke of a pen.

No, it’s not necessary, but a real end to this mess requires negotiation, and a confirmed USTR helps get that done. Just dropping the tariffs is capitulation, and bad political optics.

[Ron Erickson]

It will be interesting to see how the RCEP and the Euro sector come together on trade, including the wine business.

[Dan Kravitz]

I assume tariffs are soon to disappear? Anyone holding off on buying until later Jan?

Assuming the elected President takes office, he will have a lot on his plate. I do not think tariffs on wine will be on the front burner. I would hope for something to happen early summer.

Dan Kravitz

[AndrewH]

Not too suprising - imports of French wine >14% ABV way up; <14%ABV way down

https://www.wsj.com/articles/europe-win ... 1605754161

[David_K]

Not too suprising - imports of French wine >14% ABV way up; <14%ABV way down

https://www.wsj.com/articles/europe-win ... 1605754161

Not surprising and I've definitely noticed it in the offers I'm getting. In that respect, the recent string of warm vintages in France is probably not a bad thing. Do we have any evidence of producers increasing the alcohol in their wines on purpose, such as by picking later?

[D@vid Bu3ker]

Not too suprising - imports of French wine >14% ABV way up; <14%ABV way down

https://www.wsj.com/articles/europe-win ... 1605754161

Not surprising and I've definitely noticed it in the offers I'm getting. In that respect, the recent string of warm vintages in France is probably not a bad thing. Do we have any evidence of producers increasing the alcohol in their wines on purpose, such as by picking later?

Climate change is doing the work for them.

And now there won't be any demand for the really good stuff because we know that any wine over 14% is a hot, adulterated mess.

[AndrewH]

I wonder how "vino lovers" in the US feel about missing out on European wines.

[Nola Palomar]

Looks like there is a light at the end of the tariff tunnel. Fingers crossed that the tariffs go away at least partially.

https://www.bloomberg.com/news/articles ... eing-fight

[D@ve D y r 0 f f]

Unfortunately, I don't read this as good news. All of the rhetoric about not escalating and imposing fewer tariffs than we could all seems to relate to how much the US is escalating the dispute (by less than the escalation the US accuses the EU of), not to any relaxation of existing tariffs. And "certain non-sparkling wine from France and Germany, and certain cognac and other grape brandies from France and Germany" are among the newly-tariffed products to be officially listed soon. Sounds like maybe they're hitting the over-14% wines now, too? Plus brandy. Ouch.

[D@vid Bu3ker]

Looks like there is a light at the end of the tariff tunnel. Fingers crossed that the tariffs go away at least partially.

https://www.bloomberg.com/news/articles ... eing-fight

Right now the light is an oncoming train, but hopefully soon...

[Scott AB]

It sounds like France is re-imposing its digital services tax which may end up escalating things again.

https://www.reuters.com/article/france- ... SKBN28B4QW

[Steve Gautier]

Since the Bloomberg article was behind a paywall, not sure if this is new info or not.

[jason stein]

Since the Bloomberg article was behind a paywall, not sure if this is new info or not.

Oy.

[D@ve D y r 0 f f]

Yes, it looks like this latest move adds both the "over 14%" and the "big bottles" categories, which had previously been exempt, to the tariffs with a whopping 12 days' notice, for French and German wines. 2020 going out with a bang. This is a major move, in the wrong direction.

Edited to add: Also Cognac and Armagnac (and any other French or German brandy "other than Pisco and Singani."

[Mark Golodetz]

I think the French move on digital is a signal to the Biden administration not to leave this on the back burner too long.

[Mich@el Ch@ng]

Since the Bloomberg article was behind a paywall, not sure if this is new info or not.

It sounds like that adds sparkling wine, brandy, and still wine > 14%, is that what people are getting from this?

[Mich@el Ch@ng]

Yes, it looks like this latest move adds both the "over 14%" and the "big bottles" categories, which had previously been exempt, to the tariffs with a whopping 12 days' notice, for French and German wines. 2020 going out with a bang. This is a major move, in the wrong direction.

And sparkling wine except for jeros and above

[D@ve D y r 0 f f]

It sounds like that adds sparkling wine, brandy, and still wine > 14%, is that what people are getting from this?

I could be wrong, but it looks like "sparkling wine" and "effervescent wine" are considered two different things, and this adds only the latter. Somehow, Champagne still escapes the extra duty?

[Mich@el Ch@ng]

It sounds like that adds sparkling wine, brandy, and still wine > 14%, is that what people are getting from this?

I could be wrong, but it looks like "sparkling wine" and "effervescent wine" are considered two different things, and this adds only the latter. Somehow, Champagne still escapes the extra duty?

Hmm maybe that’s only pet nat?

[Andrew K.]

I could be wrong, but it looks like "sparkling wine" and "effervescent wine" are considered two different things, and this adds only the latter. Somehow, Champagne still escapes the extra duty?

I'd be happy to be wrong but I doubt it.

An effervescent wine is one that releases carbon dioxide bubbles at its surface.

The term effervescent is used to describe the following winemaking techniques:

Méthode champenoise or traditional Champagne method
Transfer method
Ancestral method – sparkling wine by spontaneous fermentation
Dioise/Asti Spumante method
Closed tank method
Continuous or Russian method
Carbonation method

ETA: the announcement specifically references non-sparkling wines.

The products subject to the additional tariffs include aircraft manufacturing parts from France and Germany, certain non-sparkling wine from France and Germany, and certain cognac and other grape brandies from France and Germany.

[AndrewH]

Announcement here:

https://ustr.gov/about-us/policy-office ... ft-dispute

Planned FR notice here, with descriptive list (Annex 2, Section 1) of new lines: https://ustr.gov/sites/default/files/fi ... Notice.pdf

Looks like it now covers big bottles from France and Germany (>2 litres) and wines >14% ABV as well.

[John Morris]

It sounds like that adds sparkling wine, brandy, and still wine > 14%, is that what people are getting from this?

I could be wrong, but it looks like "sparkling wine" and "effervescent wine" are considered two different things, and this adds only the latter. Somehow, Champagne still escapes the extra duty?

Hmm maybe that’s only pet nat?

"For the purposes of subheading 2204.10 the expression "sparkling wine" means wine which, when kept at a temperature of 20°C in closed containers, has an excess pressure of not less than 3 bars."

"The term "effervescent wine" means wine other than sparkling wine which contains in excess of 0.392 grams of carbon dioxide per 100 milliliters of wine."

-- Harmonized Tariff Schedule of the United States (2018) Revision 1.1, (Effective Date 02/07/2018)

[AndrewH]

It sounds like that adds sparkling wine, brandy, and still wine > 14%, is that what people are getting from this?

I could be wrong, but it looks like "sparkling wine" and "effervescent wine" are considered two different things, and this adds only the latter. Somehow, Champagne still escapes the extra duty?

Hmm maybe that’s only pet nat?

From this CBP publication (which, while a bit old presumably still holds), Champagne is "sparkling" because of the amount of pressure it is under. Less pressurized non-still wines with CO2 are effervescent:

https://www.cbp.gov/sites/default/files ... rits_3.pdf

[Mich@el Ch@ng]

Well that’s good. Basically it just impacts brandy and some Rhône/languedoc wines.

[D@vid Bu3ker]

I could be wrong, but it looks like "sparkling wine" and "effervescent wine" are considered two different things, and this adds only the latter. Somehow, Champagne still escapes the extra duty?

Hmm maybe that’s only pet nat?

From this CBP publication (which, while a bit old presumably still holds), Champagne is "sparkling" because of the amount of pressure it is under. Less pressurized non-still wines with CO2 are effervescent:

https://www.cbp.gov/sites/default/files ... rits_3.pdf

Yeah, and the chapter note in the HTS book says:

4. The term "effervescent wine" means wine other than sparkling wine which contains in excess of 0.392 grams of carbon dioxide per 100 milliliters of wine.

[D@vid Bu3ker]

Well that’s good. Basically it just impacts brandy and some Rhône/languedoc wines.

With climate change that is not quite true...

[D@ve D y r 0 f f]

"Just"

Hrrmmm...

It will hit a good amount of Bordeaux and N. Rhône, all S. Rhône, Cognac, and Armagnac. Piling those on top of German riesling, Burgundy, and the portions of Bordeaux and N. Rhône already hit is terrible.

[AndrewH]

"Just"

Hrrmmm...

It will hit a good amount of Bordeaux and N. Rhône, all S. Rhône, Cognac, and Armagnac. Piling those on top of German riesling, Burgundy, and the portions of Bordeaux and N. Rhône already hit is terrible.

If nothing else, all those efforts to determine <14% wine was actually 14.01% ABV were wasted.

[Mich@el Ch@ng]

I mean, the EU imposed new tariffs 6 days after the election. I’m not really sure what they were thinking but if they thought there wouldn’t be a reply they were wrong.

[Nola Palomar]

"Just"

Hrrmmm...

It will hit a good amount of Bordeaux and N. Rhône, all S. Rhône, Cognac, and Armagnac. Piling those on top of German riesling, Burgundy, and the portions of Bordeaux and N. Rhône already hit is terrible.

If nothing else, all those efforts to determine <14% wine was actually 14.01% ABV were wasted.

As well all the efforts to bring wine in bulk and bottle it Stateside.

[AndrewH]

I mean, the EU imposed new tariffs 6 days after the election. I’m not really sure what they were thinking but if they thought there wouldn’t be a reply they were wrong.

Well, they kind of have to do it given the WTO ruling. And no reason to wait until the inauguration . . . indeed, that would be a worse time.

[Arv R]

I'm planning on getting to know the wines of Italy better over the next few years!

The differences the two sides have are fairly substantial, and the idea that Biden will do a U turn on every Trump on Day 1 initiative is naive.

[AndrewH]

Looks like the tariffs in response to the France Digital Services Tax are set to go into effect tomorrow: https://www.politico.com/newsletters/we ... ute-792544

The good news is that the tariffs don't hit Champagne - handbags, soaps, and cosmetics.

[Mark Golodetz]

The good news is that the tariffs don't hit Champagne - handbags, soaps, and cosmetics.

Great news. Now I can sit fresh from my shower, with my Clinique make up, sporting my Hermès bag with a glass of Krug without worrying about tariffs.