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'Why should our industry suffer?' Wine importer applauds US-EU tariff ceasefire

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Alexis Keenan
·Reporter
·3-min read
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Rows of barrels are seen in the Billecart-Salmon winery in Mareuil-sur-Ay, eastern France during the traditional Champagne wine harvest October 7, 2013. The end of September start of the 2013 grape harvest was the latest in the last 30 years. Weather conditions permitted grapes in the vineyards to reach maturity and cool temperatures enabled an even quality of the fruit throughout the harvest. Picture taken October 7, 2013.   REUTERS/Benoit Tessier (FRANCE - Tags: AGRICULTURE FOOD BUSINESS)
Rows of barrels are seen in the Billecart-Salmon winery in Mareuil-sur-Ay, eastern France during the traditional Champagne wine harvest October 7, 2013. REUTERS/Benoit Tessier (FRANCE - Tags: AGRICULTURE FOOD BUSINESS)

The European Union and U.S. on Friday temporarily halted tariffs on array of products including luggage, alcohol, and produce in a boon for U.S. businesses that rely on revenue from these imports.

“When COVID came along it was like a double whammy, because you had to deal with these tariffs that were still in play, and then a lot of your [restaurant] market kind of disappeared immediately last March,” Jordan Sager, co-President of Winesellers Ltd., told Yahoo Finance. “The American market is the largest wine market in the world.”

The four-month suspension of the tariffs could be a sign of easing trade tensions between the U.S. and EU now that President Joe Biden has taken office. The tariffs stem from a 16-year trade dispute between Boeing (BA) and Airbus (AIR.BE) over aerospace subsidies. Boeing has pursued litigation for years fighting European loans and subsidies that it says give its European rival an unfair trade advantage.

Boeing's pursuit won favor from the Trump administration. As a retaliation for the Airbus subsidies, the U.S. received a green light from the World Trade Organization (WTO) in October 2019 to impose $7.5 billion in annual tariffs on EU goods. In turn, this past September in the midst of the pandemic, the World Trade Organization authorized EU tariffs on $4 billion in U.S. goods.

In December, the U.S. Trade Representative (USTR) announced plans for additional tariffs on alcohol, starting in January, including certain non-sparkling wines, cognacs, and other grape brandies, along with aircraft manufacturing parts, from the two countries. The USTR said the change was necessary to account for the EU’s use of “drastically reduced” COVID-19 era trade volume data, rather than prior year’s data, to formulate tariffs on U.S. goods.

On Friday, the U.S. also suspended tariffs on items from the UK, including Scotch, which were also part of the Boeing dispute.

'The biggest beef that we've had with all this'

In speaking to Yahoo Finance, Sager objected to his industry having been caught up in a feud over plane parts.

“Why were tariffs imposed on categories of products that had zero to do with airplane parts, aerospace, or travel? Sager asked. “That's the biggest beef that we've had with all this. Why should our industry suffer based on a dispute between two huge corporations that have nothing to do with our industry?”

Sager said American industry and American consumers ultimately pay the price for the tariffs, which were estimated to amount to about a $1 increase for each 750 mL bottle of wine subject to the additional December tariffs.

“Of the items that were on the original list, we estimate it was about 25% of our portfolio. There are some importers out there that’s 100%,” Sager said. “It’s a pretty significant piece of our business.”

Sager said this week’s announcements are the beginning of a reprieve for those that rely on wine imports to recover from losses faced over the last year and a half.

Alexis Keenan is a legal reporter for Yahoo Finance and former litigation attorney.

Follow Alexis Keenan on Twitter @alexiskweed.

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