Photo by Matt Lamers on Unsplash

Nothing changes. The news came on Friday evening. The office of the American trade representative decided to maintain the 25% customs duties imposed on French wine in October as a reprisal against European subsidies to Airbus deemed illegal.

The world of importers of French products to the United States was waiting for February 14 with concern: it was the date set by the American administration for a possible revision of the sanctions. Finally, it was on Airbus directly that the White House decided to put pressure: the customs duties imposed on aircraft imported from the European Union went from 10% to 15% from March 18, 2020. Note, the prune juice was removed from the list of taxed items, but a customs duty of 25% appeared on French and German kitchen knives.

If they feared the worst (with rumors of 100% taxes circulating insistently), importers and French wine lovers are not relieved. The 25% weighing on French wines are starting to be felt. "There are big difficulties for French wine importers in California”Says Gregory Castells, the owner of Martine’s Wine, major importer in the United States. "We are trying to start a movement in Washington DC: one of my associates was in the capital for 4 days, to go and see Democrats and Republicans in Congress”… And put pressure on their side too.

Grégory Castells' business has been an importer for 40 years in California, and its wines come mainly from Burgundy and Savoy, wines at less than 14 degrees (only wines of less than 14 ° alcoholization are indeed concerned). The American administration has never explained its choice – no more than that of not imposing duties on champagne and other sparkling wines for example – but it takes up the traditional distinction of American regulation between “table wine” (less than 14 °) and “liquor wine” (more than 14 °).

The importer did not immediately raise prices. "We don't change prices like that”, He says. "We digested the 25% paid at the end of the year”, He explains. "25% is huge over a year and 30-40% margin ”. Since January, it has started to recalculate its selling prices.

In Washington, the French Embassy is on the alert, and has set up support by informative monitoring and regular dialogue with worried companies. In 2018, France had sold one billion euros of non-sparkling wines in the United States. The French Ministry of Economy estimates that the new customs duties could cost the French wine industry up to 300 million euros a year. Some managers in the industry are even more alarmist. Antoine Leccia, president of the Federation of Wine and Spirits Exporters of France (FEVS), says "fear a drop in sales of around 50%".

On the American side, according to a study commissioned by Wine & Spirits Wholesalers of America, the US alcoholic beverage industry could lose nearly 36,000 jobs and more than $ 1.6 billion in wages this year, “Costing the US economy more than $ 5.3 billion".

The Trump administration has announced a new sanctions review in 180 days. In addition, the WTO, which had authorized these additional taxes, will rule in the coming months on an equivalent complaint by Europe against the United States and Boeing, which could authorize the EU to adopt equivalent sanctions, opening the leads to possible negotiations. In the meantime, importers, retailers and consumers will have to foot the bill.


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