Yesterday afternoon, while I was on the train to the 2017 Bordeaux UGC tasting in Manhattan, I saw some news pop up via email…Macron and Trump had come to a truce on the Digitax/French Luxury Goods Tariff yesterday in Davos, at the 2020 World Economic Forum. No tariffs on French luxury goods for 2020, and no French Digitax on American Digital companies making huge profits in France. This was great news.
For wine purposes, this meant that Champagne was not going to be tariffed 100%, as per the French luxury goods tariff proposal by the USTR. French Cheese, Champagne, Le Creuset, French handbags…all off the hook… for now.
Then, the headlines started pouring in. I got to the Bordeaux tasting at around 3:15 pm and people did not yet know, as the news had just come about around 2:30 pm. I started telling people. Within an hour, as if it was a bad game of telephone, people were rejoicing over the fact that the wine tariffs were gone. I was just one person in an ocean of hundreds, trying to correct the lies being told, while still trying to taste the very mediocre 2017 vintage in Bordeaux. If I had a whistle, I would have blown it to get people’s attention. But the lies being spread were bigger than just that one ballroom in Manhattan. Ignorant journalists started running with headlines…”Truce on Wine Tariffs!” littered everyone’s google pages. All lies. We could not get out the word fast enough. Wine Importers, wholesalers and retailers were all so happy this morning…they were spreading the gospel, like it was true…no more wine tariffs! ALL LIES!
Then, a NYC retailer sent out a message to his client base this morning. I immediately emailed him and asked him to retract his message, which went like this…”Macron and Trump agreed to hold off on a potential tariffs war until the end of 2020, and continue negotiations at the Organization for Economic Cooperation and Development on the digital tax during that period. They agreed to give a chance to negotiations until the end of the year. During that time period, there won’t be successive tariffs.”
That is true…for the French Luxury Tax, which for wine purposes only applies to Champagne.
The wine industry (or at least a small portion of it) has been working quite diligently for a couple of months (especially the National Association of Wine Retailers) to get the word out on these dangerous tariffs. The 25% tariff imposed on October 18th on many wines from the European Union still exists today. In a few weeks, that amount could conceivably go up to 100% (albeit unlikely, given our successful pushback, with the help of 27,000 consumers that wrote to the USTR). However, there is a likelihood that the tariffs could include wines that were previously carved out of the October tariff, including Champagne, including Italian wines, including wines with alcohol higher than 14%, etc etc etc. This tariff, known as the Airbus/Boeing dispute tariff, has absolutely nothing to do with the French luxury goods tariff. The Airbus tariff is in place because of a 16 year old Boeing Airbus/illegal subsidies dispute between the EU and the United States. The US will continue collecting those tariffs from the EU because the World Trade Organization (WTO) gave the US that right to do so…to the tune of up to $7.5 billion!
As an industry, all we can hope for is that the USTR removes wine from those tariffs (which comes up for reconsideration every 6 months after this February). Until then, these tariffs will go on. They will continue to damage American businesses, like mine. They will continue to raise prices to wine loving consumers, like you, and they could potentially continue to get worse, before they get better.
By Feb 17th, the US will announce new tariffs…these new tariffs can be updated in any of the following fashions:
- Stay exactly the same as they are
- % of tariff can be increased
- % of tariff can be decreased
- Products, like wine, could be removed (for 6 months at a time…known as carouseling out)
- Previously carved out items (like Italian and sparkling wines, spirits like Cognac, Blended Scotches) can be added (for 6 months)
This will be revisited every 6 months after Feb 17th with the same 5 choices.
In addition, the USTR does not have to make a formal announcement and can keep the status quo!
Please help me get the word out to the American public, to these terrible American journalists, who have misspoke, and to those American wine businesses, who should be better educated on this subject matter, so they stop spreading lies!
Daniel is the President of the National Association of Wine Retailers, a retailer/wine club/auction house national trade organization founded in 2006. Daniel has served on the Board of Directors since 2009 and is currently President of the organization since 2012. Daniel is frequently called to testify on to testify before local agencies and state governments all over the country on behalf of progressive wine retailers. He is the owner of Grapes The Wine Company in White Plains, NY.