Tag Archives: wine tariff

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.

Ask the WC 24: Wine tariff, grape harvest, wine blogging

wine tariffThis edition of Ask the WC: Could the wine tariff go away? Plus, how is California handling its harvest in the middle of the pandemic, and what’s going on with wine blogs these days?

Because the customers always have questions, and the Wine Curmudgeon has answers in this irregular feature. You can Ask the Wine Curmudgeon a wine-related question by clicking here.

Hello, most cranky one:
Your post about the wine tariff not going up implied we could have some good news, like it might end soon. Or am I being too optimistic?.
Hoping for the best

Dear Hoping:
I’m cautiously optimistic about being cautiously optimistic about the tariff going away, but probably later rather than sooner. One top U.S. importer told me this week that it was incredibly significant that the Trump Administration didn’t extend the tariff to other alcohol and food products or increase it on existing items. That’s because it had been threatening to do just that, and just days before last week’s announcement. So maybe someone in Washington finally understands how much the tariff is hurting the alcohol business and the economy at a time when we need all the help we can get. Having said that, the importer and I agreed that trying to make sense of Washington these days is almost impossible. Hence, two cautiously optimistics.

Hi, Wine Curmudgeon:
Will the California grape harvest be normal this year? I mean normal in that the Covid thing won’t make it more difficult.
Wondering

Dear Wondering:
Everyone I’ve talked to says the harvest should proceed as planned, despite the pandemic. There might be some regional shortages of labor, but most California grapes are harvested with machines so labor isn’t as important as it used to be. But, given the way this thing strikes suddenly, all could change overnight if one of the wine regions sees a surge in infections. And none of this takes into account possible wildfire complications.

Hello, WC:
What’s the state of your wine blogging these days? Didn’t you say you were hurting at the start of Covid 19?
Inquiring mind

Dear Inquiring:
My traffic has slumped this summer, but who knows why? It usually decreases this time of year, and I have had some technical problems on the blog’s back end that probably didn’t help, either. And we all know how fickle our overlords at Google can be in driving traffic to the blog. My best guess is that the pandemic, the election, and all the rest over the past six months have given people other things to do than to check out wine blogs, sports blogs, and all the rest. But not to worry: I renewed the blog’s hosting for another year, so I’m not going anywhere for a least another year.

Photo: Ryan McGuire, via Librestock, using a Creative Commons license

Wine tariff update: Has Europe made the U.S. an offer to end the tariff that it can’t refuse?

wine tariffEuropean officials say illegal aircraft subsidies will be re-paid, so there’s no need for the U.S. wine tariff

The European airplane manufacturer at the center of the U.S. wine tariff controversy says it will increase loan repayments to France and Spain to convince the United States to settle a 16-year-old dispute over billions of dollars of aircraft subsidies.

The news couldn’t get much better than that, could it?

No word from U.S. trade officials on the European offer, which was made on Friday afternoon. But several European government representatives said over the weekend that with the repayments, there’s no reason for the U.S. to continue the 25 percent tariff on French, Spanish, German, and British wines, as well as the levy on airplane parts and a host of other food and alcohol products, including whiskey and some Italian cheeses. The French finance minister was adamant: The U.S. must remove tariffs imposed on European products such as French wine, he told Reuters.

Reuters also reported that an industry source said the manufacturer, Airbus, made the concession because Europe and the U.S. are at “an impasse and need to get out of it. It is a way to show good faith and open the door to find a solution.”

In fact, the tariff has wreaked havoc on U.S. wine imports, the whiskey business on both sides of the Atlantic, and even airplane manufacturing. French wine exports to the U.S. have declined by as much as one-half since October 2019, when the tariffs were imposed. The U.S. Distilled Spirits Council, a trade group for whiskey producers, said U.S. and European companies “have suffered enough.”

And, because the Wine Curmudgeon appreciates irony, it’s worth noting that Airbus has stopped production of the plane that caused the tariff row, citing slow sales. In other words, we’re having a trade dispute about a product that no longer exists.

More about the European wine tariff:
The Trump zombie wine tariff
Robin Hood takes on the wine tariff
Panic wine buying

The Trump zombie wine tariff is lurking over the horizon

wine tariff

The Trump zombie tariff is lurking over the horizon, which means the price of European wine could double.

Why haven’t we been able to kill the Trump zombie wine tariff, which is bad economics and bad public policy?

July 13 update: Federal trade officials announced Friday that the U.S. has delayed imposing additional tariffs on French wine until January, as part of the dispute over the French tax on Facebook, Google, and Amazon. And there is still no word on whether the Trump Administration will impose additional tariffs on all European wine as part of the Boeing-Airbus trade dispute. So, yes, some good news — though not as good as so many have been reporting.

July 6 post: Just when it seemed safe to drink European wine without worrying that it could double in price, the Trump zombie wine tariff is lurking over the horizon.

That’s the 100 percent tariff on almost all European wine, which the Trump Administration proposed in February. The administration backed off then, raising tariffs on European airplane parts instead. Which made perfectly good sense, since the original trade dispute was about airplane parts.

But the proposal is back. Last week, the Office of the U.S. Trade Representative proposed tariffs on nearly $3.1 billion worth of European products and that would raise the current wine tariff from 25 percent to 100 percent.

In other words, effectively doubling the price of European wine in the U.S. Some have gone as far as to call the 100 percent tariff the worst threat to the U.S. wine business – imported and domestic – since Prohibition.

None of this makes any sense, and not just because this whole thing is about airplane parts.

• The world economy is in recession. So why would any sane person consider raising taxes?

• The coronavirus. So why would any sane person consider raising taxes?

• France’s so-called digital tax on U.S. companies like Facebook, Amazon, and Google has somehow become part of the dispute, though why the federal government needs to protect these giga-billion dollar behemoths is beyond me. And doesn’t President Trump hate Amazon?

The good news, if there is any, is that most of the people I talked to say the tariff proposal is likely empty bluster, more posturing from an administration that has perfected bluster. Two wine industry officials, who asked not to be identified because of the sensitive nature of the topic, said they didn’t expect the 100 percent levy to be approved. One, who has been closely involved with negotiations, said, “My personal view is that the most likely outcome is no change” until the final World Trade Organization ruling later this year on the original aircraft parts dispute.

Having said that, this is no time for slacking off. After all, we all know how difficult it is to kill zombies. Hence, if you oppose the 100 percent tariff, you can leave a comment with the U.S. Trade Representative at this link. The comment period ends on July 26.

Image courtesy of George Romero’s Night of the Living Dead, using a Creative Commons license

More on the zombie wine tariff:
Trump Administration backs off 100 percent wine tariff
Welcome to Sherwood: Robin Hood takes on the wine tariffs
Panic wine buying

Ask the WC 23: Wine prices, rose, South African wine

wine pricesThis edition of Ask the WC:  Has the wine tariff pushed up wine prices? Plus, why isn’t rose sweet and whether South African wine is worth buying

Because the customers always have questions, and the Wine Curmudgeon has answers in this irregular feature. You can Ask the Wine Curmudgeon a wine-related question by clicking here.

Greetings, WC:
Have wine prices gone up because of the tariff? I can’t tell, but I buy the same wine over and over, so I’m not a good person to ask.
Watching my pennies

Dear Pennies:
The biggest surprise with the tariff — to me, anyway — has been retailer reluctance to raise prices, and especially for the wines we write about on the blog. There have been exceptions, of course; I was in the country’s premier “natural food” grocer the other day, and it looked like every French and Spanish wine had gone up exactly 25 percent, the amount of the tariff. But many of the other retailers I have visited or talked to are making an honest effort to hold the line. I’m especially seeing many retailers bring in similarly-priced labels to replace the tariff wines. Which, all things considered, makes me a lot less cranky about the tariff. Still, as one Dallas retailer told me, all bets are off when the new rose vintages arrive in the next month or so.

Dear Wine Curmudgeon:
Is rose supposed to be sweet or not? Some taste like white zinfandel, and others don’t. When did this start?
Pinked out

Dear Pinked:
Rose is dry. White zinfandel is sweet. This used to be cut and dried. But in the wine business’ ill-conceived attempt to woo younger consumers, they’re sneaking residual sugar into “dry rose.” Typically, most European pinks are still dry, so you’re safe with French, Spanish and Italian wines. One way to tell: If the dreaded word smooth appears on the back label, I wouldn’t be surprised if the wine was sweet. Rose is supposed to be fruity, not smooth.

Hello, Wine Curmudgeon:
Am I starting to see more South African wine in the U.S.? Is it worth buying?
Curious

Dear Curious:
The answer to the first part of your question is yes and no — yes, because sales have increased substantially, and no because sales are starting from such a small base. South African wines, save for a burst of popularity in the late 1990s, have been few and far between in the U.S. But quality has improved markedly since then, and it’s possible to find Rhone-style red blends, whites like chenin blanc and sauvignon blanc, and even dry rose at a fair price.

Photo: “a Bourgogne” by miss_rogue is licensed under CC BY-SA 2.0 

Wine tariff update: Does anyone have any idea what’s going on?

wine tariff updateWe dodged one 100 percent tariff, but will there be another one? And what about the 25 percent tariff?

How confusing is the current wine tariff situation? An editor, sharp and smart, was completely baffled when I wrote that there was a chance the Trump Administration would raise the current 25 percent tariff to 100 percent and expand it to include all European wines.

“Wait a minute,” she emailed me. “I don’t know about that. Didn’t they just decide to hold off on the 100 percent tariff?”

Yes, they did. But that was a 100 percent tariff on luxury goods, including Champagne, to punish the French. That’s because they had the temerity to suggest that U.S. tech giants like Google and Facebook should pay taxes on their French revenue. The French and U.S. governments announced this week that they would continue negotiations over France’s proposed digital tax, and that the 100 percent Champagne tariff is on hold.

But that still leaves the expanded 100 percent tariff hanging over our heads.

My editor wasn’t the only one befuddled. “I honestly have a hard time keeping track of what’s going on,” one U.S. importer told me this week, and it’s her job to know what’s going on. “No one is really covering the issue, not even the New York Times. So it’s hard to know what’s happening, even if it has already happened.”

Your wine tariff update primer

Which, of course, is why the Wine Curmudgeon is here. Consider the following your wine tariff update primer:

• The current 25 percent tariff covers French, Spanish, German, and British still wines with less than 14 percent alcohol. So some French red wines aren’t affected. In fact, several importers told me they’re “adjusting” the alcohol levels on their labels to get around the tariff.

• Nevertheless, imports from three of those countries have dropped dramatically since the tariff was imposed. The U.S. Census Bureau reported that Spanish shipments to the U.S. declined almost 17 percent in dollar terms from October to November 2019, while German shipments fell 40 percent over the same period. The monthly totals were the lowest for Spain since 2006, and the least since 2002 for Germany. French wine imports, meanwhile, fell by almost two-thirds in dollar volume over the October-November period, and the total was the least since 2008.

• Prices have not always increased the full 25 percent. The same importer told me that some European producers, importers, and distributors have cut margins on some wines they consider essential to the U.S. market to keep increases to a minimum. But all bets are off when the 2018 roses and whites are released in the spring.

• The next key date is the middle of February, when U.S. trade officials must review the original decision. They can keep the tariffs, impose new ones, or rescind them. In addition, the World Trade Organization is expected to announce later this year the U.S. gave Boeing illegal subsidies in retaliation for EU subsidies to Boeing competitor Airbus. That’s because this entire mess started when the WTO ruled in October that those EU subsidies were illegal, and the Trump Administration responded with the 25 percent levy and threats of the 100 percent tariff. Many of the people I talked to this week hope that the WTO decision against Boeing will give the U.S. political cover to withdraw the 100 percent threat and rescind the 25 percent tariff.

Why wine?

No one is quite sure. President Trump’s business background is in the hospitality business, which sells wine, and his family owns a winery in Virginia. So a tariff would seem contradictory. On the other hand, say a variety of wine industry officials, wine is seen as especially European, and the president’s trade agenda has targeted the European Union almost as much as China.

And one Midwest retailer told me the tariff is surprisingly popular among wine-drinking Trump supporters. This no doubt explains the steady trickle of blog subscription cancellations over the past couple of weeks, since I have made it quite clear I oppose the tariffs. And no doubt this post will lead to more cancellations.

Ironically, there seems to be little enthusiasm for bringing in more wine from countries not included in the tariff, including South Africa, Chile, and Argentina. The problem, says one importer, is the complexity of adding new producers to the wine supply chain – first, finding a producer who fits the niche the importer needs, and then finding enough distributors in the US to handle the new wines. And this doesn’t include the paperwork and bureaucracy to add the wines

Panic wine buying

panic wine buying

Panic wine buying, as the Wine Curmudgeon stocks up before a possible 100 percent European wine tariff.

The Wine Curmudgeon, faced with the prospect of a 100 percent European wine tariff, does some panic wine buying

The picture pretty much says it all. I spent an hour or so last week at Dallas’ biggest wine retailer, stocking up in case worse comes to worst. The result? 28 bottles of wine for $290. It’s good to know that the Wine Curmudgeon hasn’t lost his touch in the face of an international crisis of epic proportions.

A few thoughts after my panic wine buying:

• Lots of gaps on the shelves. Lots. I bought the last two bottles of the Chateau Bonnet white, and there wasn’t any Chateau Bonnet red or new Hall of Fame member Azul y Garanza, the $11, 1-liter Spanish tempranillo. Apparently, I’m not the only one who has panicked.

• Lots of cheap wine I haven’t seen before. It looked like the retailer had done some buying, too, stocking up on inexpensive European wine before the 25 percent tariff raised its prices. I bought some of these new wines, and will report back as the situation warrants.

• I even bought California wines. This included the always dependable McManis as well as the Shannon Wrangler red blend, which was the wine of the week 4 ½ years ago. Oddly enough, the wine cost $2 less this time.