The Trump administration has decided not to place tariffs on French sparkling wine in retaliation for France’s taxes on large tech firms. That’s good news for American wine consumers. The bad news is that the government will be debating over the next few weeks whether to maintain 25 percent tariffs on many other European wines and could possibly raise them.
The sparkling spat
For months now, the White House and the Office of the U.S. Trade Representative (USTR) have been engaged in a high-stakes spat with France over the digital services tax, which French President Emmanuel Macron’s government passed in order to collect taxes on big tech firms that do plenty of business in France but pay little in taxes. American firms like Apple and Google dominate the list of companies that would be impacted.
After talks between officials from the two governments, the French agreed to hold off on enforcing the tax while multilateral talks to reach a global solution on digital services taxation were conducted by numerous nations. But the Trump administration quit those talks last month, unhappy with the progress. U.S. Trade Representative Robert Lighthizer said tariffs would move forward. French sparkling wine faced potential 100 percent duties.
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But on July 10, the USTR announced that French handbags and makeup would face 25 percent tariffs, but sparkling wine would be spared. What’s more, the USTR would delay imposing the tariffs because France had agreed not to collect the taxes for the time being.
That doesn’t mean the battle is over, however. And Italy and Austria have passed similar taxes, while Spain has proposed one.
Planes vs. wine
Despite the win for Champagne lovers, another battle is brewing. The USTR is conducting a review of its tariffs in another fight, this one between the U.S. and the E.U. over subsidies to airplane manufacturers. The White House imposed 25 percent tariffs on most table wines from France, Germany, the U.K. and Spain this past October. After a review in February, the USTR left those tariffs unchanged.
Now another mandatory review has come, with a decision scheduled for August. The USTR could eliminate the tariffs, raise them, or leave them in place. The first option seems unlikely as the U.S. has also walked away from talks with E.U. over the offending subsidies.
The USTR is collecting public comments on the tariffs at its website until July 26. Ben Aneff, managing partner at Tribeca Wine Merchants and president of the U.S. Wine Trade Alliance, believes the 28,000 comments the USTR received during the previous review period made a difference. “Past comments convinced congresspeople,” Aneff told Wine Spectator. “It does get USTR’s attention.”
Share your thoughts on the tariffs on European wines. You can comment at the U.S. Trade Representative's website through July 26.
