Is a wine tariff solution on the horizon?

wine tariffReuters reports possible path to compromise in wine tariff trade war

Oct. 14 update: Reuters is reporting that the European Union has been given permission to impose $4 billion worth of tariffs on U.S. goods as part of the aircraft parts subsidy trade dispute.

Says the news service: “However, negotiators on both sides say it could also lead at last to discussions to resolve a 16-year legal battle over subsidies to aircraft manufacturers Boeing and Airbus. … Both the United States and the EU have signaled interest in settling the dispute over plane maker subsidies, while accusing the other of refusing to talk seriously.”

So, perhaps, we do have reason to be cautiously optimistic.

Oct 5: Could bourbon be the key to upending the Trump Administration’s 25 percent wine tariff?

That’s a distinct possibility after a Reuters report last week that said the European Union is considering retaliatory tariffs on U.S. wine and whiskey. The U.S. sends very little wine to Europe; in fact, U.S. wine exports overall are trivial, only about 10 percent of what we produce each year. But we sell a lot of bourbon and Tennessee whiskey to the EU, which accounted for more than half of all American whiskey exports in 2019. In this, it’s U.S. whiskey’s biggest overseas market.

There is already a 25 percent tariff on U.S. whiskey in the EU, dating to a 2018 Trump Administration tariff on European steel and aluminum. Reuters reported that the World Trade Organization will announce this month that the EU can levy another tariff on whiskey and a new tariff on wine as part of the on-going aircraft parts trade dispute that gave us the original 25 percent wine tariff.

(And if you’re confused reading this, given that wine and whiskey are being taxed in disputes about airplanes, steel, and aluminum, think how irritating this is for me. I have to write the same stupid sentences over and over to explain this foolishness.)

In other words, a compromise is more possible than ever. That’s because a hike in the whiskey tariff would devastate the business, already reeling from the first tariff and the pandemic. By one account, U.S. whiskey sales to the EU have fallen by one-third in the past 18 months. Faced with that possibility, says the Reuters story, the EU and the U.S. have more reason than ever to end the trade war. This ties into developments a couple of weeks ago, when Airbus — which got the illegal subsidies that started this mess — apologized and offered to pay the money back.

Plus, given Reuters’ track record record in covering the wine tariff, when it writes that the EU may be more concerned with ending the trade war than with upping the ante, there’s reason to be cautiously optimistic.

Reports the news service: “ ‘Everybody’s been waiting for this. It sets the stage for a negotiation,’ said William Reinsch, a former senior U.S. Commerce Department official and trade expert at the Council on Strategic and International Studies.”

Having said that, there have been stories in the European and U.S. financial media over the past couple of weeks implying just the opposite. There was one especially depressing story in Britain’s Financial Times saying there was almost no hope, and that the trade disagreements were too deeply rooted in mutual animosity for compromise.

Which is too bleak a prospect even for someone as cranky as I am.

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