President Trump’s tariffs aren’t hurting European wineries. They are simply shifting their sales to China. And Harry Root of the U.S. Wine Trade Alliance and Ben Aneff, National Association of Wine Retailers (NAWR) fear that once new trade routes for EU wine are established, it will be near-impossible for U.S. importers to get them back.
“Due to ill-advised tariffs on wine, we are witnessing the direct transfer of the American-European wine trade to China and other markets and the only people getting hurt are American business owners and consumers,” they say.
Current 25% tariffs on European wine and looming threats of increasing those tariffs to 100% stem from a dispute over subsidies the EU provides to Airbus.
“China is a ready and willing customer for European wines not sold to American importers. New numbers from the Global Trade Atlas verify that the 25% tariffs are already speeding the growth of the Chinese market. While case sales of wine from France to the US plummeted by 48% during the first month of 25% tariffs, exports from France to China grew by 35%. China’s purchases of French wines were 118% higher than the US in November,” said Root.
He adds that despite the huge drop in French wine exports to the U.S., overall French wine exports actually increased after the tariffs, showing just how ineffective tariffs on wine are in punishing France.
According to Meininger’s Wine Business International, the EU is also releasing government marketing subsidies to build new trade partnerships. Releasing $1.3 billion of their 5 year funding cycle for immediate use; adding $12 million to the EU marketing budget for 2020; and allowing companies to redirect marketing plans without restriction.
“Once new trade routes are established for a big chunk of EU wine, it will be very difficult to bring that supply back, breaking a key tenet of wise tariff practice: don’t cause long term damage for a short-term action,” the two groups said in a statement.
The U.S. Trade Representative is expected to decide by Feb. 17 on whether to impose the 100% tariff on European wine.