U.S. Tariffs: The Wine Industry Calls on the French Government for Support

A few months ago, Donald Trump, the President of the United States, had already threatened to impose higher tariffs on European wines—particularly French ones—sold in his country. His threat was carried out this month. As a result, since October 18, 2019, tariffs on many consumer products have been raised from 10% to 25%. Some products are therefore more affected than others, which is unfortunately the case for wines from French wine-growing regions. For these wines, the increase is 25%. However, in France, wine ranks second among exported products. For industry professionals, these new taxes are particularly concerning, especially since they will also face the effects of Brexit. That is why they recently asked the government to quickly implement support measures.

A sharp increase in tariffs is causing concern in several wine-producing regions

For professionals in the wine industry, this 25% increase in tariffs is very bad news. Admittedly, it wasn’t unexpected, since the U.S. president had already mentioned it. But this 25% rate is quite a bitter pill to swallow. French wines are not the only ones affected; the same applies to wines from Spain, Germany, and the United Kingdom. Nevertheless, in France, this sanction is likely to have serious consequences, particularly for regions that export primarily to the United States. For example, producers of Chablis They expect their sales in the U.S. to drop by half because, with this new tax, the price of their bottles will rise. And overall, this U.S. sanction will affect the entire industry, as the U.S. is the leading export market for French wines and spirits, accounting for 3.2 billion euros in revenue.

Why did the United States impose sanctions?

For those in the French wine industry, this tax increase is all the more difficult to accept because they are “collateral victims of a conflict that is not our own,” as Antoine Leccia, president of the Federation of Wine and Spirits Exporters, puts it. This is why, on Friday, October 18, they called on the government and the European Commission to take supportive measures and open negotiations with Washington. In fact, these U.S. sanctions follow subsidies granted to Airbus. From now on, the company’s aircraft will cost 10% more in the United States. However, Donald Trump argues that with these subsidies, Europe is penalizing American companies (Boeing in this case) by erecting “enormous barriers” designed to reduce imports. Consequently, he decided to increase tariffs on numerous products, including wine. Last Monday, October 14, he secured approval from the World Trade Organization, and a few days later, on October 18, the tariffs took effect. Now, industry professionals are awaiting responses from the French government and the European Commission, but as Bruno Le Maire noted, an “amicable resolution to the Boeing/Airbus dispute” is needed. In the meantime, the wine industry will have to get organized.