Tariffs to increase cost of Champagne
WASHINGTON — That glass of Champagne being raised to welcome in the New Year is about to get a lot more expensive.
Absent a major breakthrough in trade negotiations with France, the Trump administration is preparing to raise tariffs on a host of French products — including cheeses, wines and Champagne — by midJanuary. That move might result in a 100 percent tax increase on France’s key exports in response to a pending digital tax imposed by Paris.
The U.S. move would severely impact the French wine industry, particularly its sparkling wine varieties — which amount to more than $775 million in exports to the United States each year.
American wholesalers, restaurateurs and business owners are warning the White House that its next round of tariffs could have a ripple effect well beyond the wine belt.
“These tariffs on EU wines and spirits are going to impact consumers across all price points, from entrylevel spirits to luxury level,” Michael Bilello, a senior vice president at Wine & Spirits Wholesalers of America, told McClatchy, warning it could cost significant American jobs. “We’re talking about a trade with 88,000 American jobs, over 370 family-owned American businesses in over 3,000 locations nationwide — across every state and in every congressional district.”
The liquor industry has been fiercely opposed to President Donald Trump’s tariff plan, warning it could impact consumer behavior in a thriving market. The Distilled Spirits Council of the United States, the Kentucky Distillers’ Association, and the American Craft Spirits Association have all come out against the tax increase.
“You have an exploratory culture in the industry now where consumers are being exposed to new and different brands — it’s led to what is called premiumization, where millennials are drinking less but higher-end,” Bilello said. “These taxes could disrupt the trends in the industry that have been very positive and led to growth.”
In October of this year, the Office of the U.S. Trade Representative imposed a 25 percent tariff on select wines from France, Spain, Germany and the United Kingdom. That round excluded sparkling varieties and wines with more than 14 percent alcohol.
But the next round threatens to increase tariffs on all varieties, as well as goods such as cosmetics, handbags and cheese — a total of more than $2.4 billion in annual French imports.
It is a response to France’s intention to proceed with a plan that would compel major digital companies, including American giants such as Google, Facebook and Amazon, to pay more in taxes for their operations in France.
French officials believe the large tech companies have circumvented tariffs for years by developing headquarters in low-tax European capitals, and several other European governments — including the United Kingdom and Italy — are also debating imposing digital taxes. But French diplomats fear that Paris has now been disproportionately targeted by the Trump administration because it would be the first in Europe to proceed with a policy to close the loophole.
Domestic pressure is mounting on French President Emmanuel Macron to change course in time to avoid Trump’s harshest actions yet. The Fédération des Exportateurs de Vins et Spiritueux issued a statement earlier this month chiding Trump for his threats and imploring Macron for help.
“In recent months, the U.S. president has repeatedly threatened to tax French wines in response to the decision taken by France to adopt a tax on digital services,” the trade group said, calling on Macron to take “all the necessary initiatives, at the national, bilateral and international levels, so that our sector does not pay the price of the economic and political choices made by France.”