Tentative hopes for US wine tariff easing
Global trade tension has continued to loom over wine shipments in 2020, but in the US there was speculation that a Joe Biden-led administration might reverse tariff hikes on European wines that, according to some retailers, have driven up prices.
Wine has found itself in the middle of fraught trade relations this year, from negotiations over Brexit to China’s antidumping probes into Australian wine.
Two of the most high-profile disputes, however, have been between the EU and US over subsidies paid to Airbus and Boeing respectively. The US imposed $7.5bn of retaliatory tariffs on European imports in October 2019, including 25% levies on French, Spanish, German and UK still wines at 14% alcohol or below.
The EU recently indicated it would move forward with levying $4bn of tariffs on US goods, albeit excluding wine.
Ben Aneff, president of the US Wine Trade Alliance, which has lobbied against tariffs, told Decanter the group hoped a Biden administration ‘will recognise that this trade war benefits no one, and that it has been particularly damaging to small, family-owned businesses here in the US’.
Political commentators have said there are no guarantees, however, and that any resolution may take time. Both sides have previously said they want a settlement.
Have wine drinkers been affected? ‘The impact of tariffs has been twofold,’ said
Shaun Bishop, CEO of California-based wine merchant JJ Buckley, explaining that his company has seen ‘both a decrease in product offerings and an increase in prices’.
Aneff, speaking in his position as managing partner at Tribeca Wine Merchants in New York, said: ‘We’ve seen large price increases on many of our favourite wines, especially from Spain, Bordeaux and Burgundy – a particular speciality of ours.’
Aneff added: ‘The 25% tariffs, paired with a stronger euro, have caused wine prices to notch up significantly to US consumers.’
At K& L Wine Merchants, co-owner Clyde Beffa Jr said ‘tariffs have not hurt sales of wines under $50’, but added that ‘expensive Burgundies got hit hard, as did some Bordeaux’.
Some merchants also believe there has been an effect on the fine wine collectors’ market. Matthew O’Connell, head of investment at trading platform and analyst company BI Wine & Spirits, said he believed there was ‘real pent-up demand’ in the US, where some buyers have held back from purchasing Bordeaux and Burgundy.
As a knock-on effect, ‘US collectors are not selling their own wines [either]’, O’Connell said, citing BI data showing lower trading on US fine wine in recent months. With several top California Cabernets sold exclusively via members’ clubs, private clients are a key source of market supply, he explained.
Jean-Philippe Weisskopf, associate professor of finance at the Ecole Hôtelière de Lausanne and a specialist in wine economics, said it is hard to generalise when considering the impact of wine tariffs on drinkers. One key factor was the ability and willingness of the trade to absorb extra costs.
In the US, he said it appeared that wineries, importers and distributors had in some cases taken a hit on profit margins in the hope that levies would be reversed.
Another variable was whether consumers would switch to different wines. ‘Is a white Burgundy drinker willing to change to a Californian Chardonnay due to the higher price? Things here are not entirely clear.’
The impact of Covid-19, which has reduced wine sales via restaurants among other channels, made the situation even more complex, associate professor Weisskopf said.