illustration by Donald Clement
In January of 2020, the fight against wine tariffs was well underway for many in the industry. With the pandemic taking much, if not all, the attention away from the topic of tariffs, what is the current situation? With a little help from our friend Ben Aneff, President of the Wine Trade Alliance, we can learn the current state of wine tariffs and how we got to this point.
Wine and International Trade, Abridged
The European Union and the United States Trade Representative (USTR) for years have argued over trade subsidies for two aircraft companies, Airbus and Boeing. The World Trade Organization (basically the referee between the EU and US) felt the EU had illegally granted incentives to Airbus and allowed the US to place retaliatory taxes on imports from EU nations totaling $7.5 billion.
In October 2019, the US allocated a 10% tariff on aircraft imports from the E.U. and a 25% tax on some odd, additional imports from France, Spain, Germany, and the United Kingdom. Items like powdered Greek yogurt, Italian pecorino cheese, Irish and Scotch whiskies, and wine. The tax is strangely specific, noting wines over 14% alcohol or large-format bottles are exempt.
Why did the US place an additional 25% tariffs on items unrelated to a dispute between airline manufacturers? Ben Aneff gives us some insight: “Airbus is the most important company in the EU. They have tremendous political power, and a large tariff on Airbus products would have brought the EU into compliance much more quickly,” Aneff explains.
Yet these EU nations quickly adapted to the tariffs and started shifting their focus away from the US to other markets. These marquee wines were being sold to other countries, in particular, China.
Aneff continues, “By November of 2019, the export numbers from France on appropriate wines showed US purchases of wines from France dropped by 50%…overall [EU wine] exports are up 2%. They simply sold the product elsewhere, which is another reason why these tariffs aren’t effective.”
The Real Impact on Main Street USA
The quick observer would see this as a “wine snob” or “foodie” problem, but it’s the potential loss of businesses and jobs over a tax not pertaining to this industry. A tax on French wine and other European foods directly affect the warehouse employee and delivery driver for the distribution company, the restaurant server, and the kitchen worker. The list of individuals hurt by this tariff is tremendous.
For many consumers, the journey an imported wine goes through is unknown. There are many stops along the way, and for a long time wine was traded between the EU and US, free of tariffs. “It created the most robust wine industry in the world,” Aneff explains. The taxation or tariffs on imported wine and selected foods are doing more harm to the US market than the EU.
Aneff walks us through the process, “Tariffs on wines are not effective, largely because they do more damage here in the US than abroad, and the EU knows this.” He continues, “When you walk into a store to buy a bottle of wine in the United States, you’re walking into a US-owned wine retailer, almost certainly a small business. There are more than 47,000 independently owned wine stores in the US. Most of them are small, family-owned businesses.” Small retailers buy from US-owned wine distributors, more than likely a small business. Those distributors buy from US-owned wine importers.
Aneff weighs in on the financial costs, “Given the fact, the pandemic has been an absolute disaster for the restaurant industry and the fact that so many of their key [food and wine] products have very large tariffs on them, it’s incredibly bad policy. It’s poorly thought out.” He adds, “Effectively for every $1 we spend on wine from the EU; US businesses make about $4.50. Inversely for every dollar of damage, we do to the EU with these tariffs, we do more than $4 in damage to US-owned business.”
A Voice of One, The Power of Many
If ever there has been a call to action in this country, now is the time. Spreading the word about wine tariffs is truly about asking for help. The more conversations about an unfair tariff will lead to change. When so many are fighting for change with social and political issues, protecting ourselves during a pandemic, and voting in a divisive presidential election, where do wine tariffs fall in a list of priorities?
As President of the US Wine Alliance, Ben Aneff is passionate about ending these misguided wine tariffs. Aneff adds, “The USTR should recognize that wine is not an effective political lever in the EU and hence should end tariffs on wine.”
Aneff continues, “[The] USTR is required to review these tariffs every 180 days. There was an open comment portal where the US Trade Representative asked for comments from the public [that] closed in August. They had a record number of submissions-over 27,000 people submitted. The vast majority are asking USTR to end tariffs on wine.”
Aneff agrees keeping the conversation going is vastly important to the cause. Signing up to several online platforms can keep you informed. For wine and trade professionals directly affected by these wine tariffs, signing up at uswinetradealliance.org is the most effective way to stay proactive. Everyone, especially consumers, should follow the US Wine Alliance’s Instagram page. It hosts an array of current information and resources.
For those that may have never written a congressional representative, Aneff offers advice on how to speak up and speak out. “For people that want to write their congressman, they can go to endwinetariffs.com, and it will allow them to easily write their US senator and their representative in the house.”
With enough of an outcry from the public, the USTR can choose to remove these tariffs on food and beverage imports and place them on products directly related to the airline industry. Ben Aneff and countless other professionals are committed to fighting the good fight with the USTR and policymakers. By staying informed, contacting congressional representatives, and drinking more imported wines, every individual can help the cause to reform these tariffs. With a little hope, proactive advocacy, and tenacity, we can see some positive change with not only wine but all causes worthy of our attention.