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09 Mar 2021 | Randy Kemner

Good News Regarding the Tariff "Game"

There is one word that is more frightening to wine lovers than phylloxera.

 

Tariffs.

 

Many of our imported wine and whisky customers are aware of the 25% tariff imposed by the past administration in 2019.  We were told this was to put pressure on negotiations between Airbus and Boeing over unfair trade policies.  The tariffs applied to wine from the EU as well as olive oils, cheeses, whisky, gin and other liquor.   Tariffs applied to wines that were 14% alcohol and lower, excepting champagne (for reasons that can only be imagined).

 

Yikes!  Our small importers got on their phones right away to enlist their vignerons, many of whom aren’t wealthy by any stretch of the imagination, to help mitigate the inevitable price hikes coming our way.  The wineries lowered their prices, the importers took a big cut on their margins, and our customers barely felt any pain.

 

Even before the pandemic dislocated the market, things were pretty good for wine consumers who only suffered from modest price increases, if any.  A few producers re-labeled their wines to take advantage of the higher alcohol loophole with alcohol postings of 14.5% to avoid the airline dispute penalty, a practice that could land them a big fine, or worse if found out. 

 

I recently drank a favorite Sancerre from a longtime producer of ours and marveled at how clean and traditional it tasted.  It clearly wasn’t from a ripe vintage which we’ve seen a lot of in recent years.  As I turned the bottle around expecting to see 12 ½ % on the label, I was astonished:  14.5% by volume!  There was no way that perfect wine carried that much alcohol, but I knew why it said what it said.

Then, last October, with three months left in the administration, the government announced it was taking off the 14% alcohol cap and extended the tariffs to all table wines coming from France and Germany, plus Cognac and Armagnac.  The jig was up.

 

Importers and wineries couldn’t hold out any longer, as we had feared, bracing for a round of price hikes in the coming months—we’ve been told as much.  How high prices would go was anyone’s guess right now.  The Lefas Bourgogne Rouge, which flew out of here last November at $18.99, was recently delivered at a higher price blamed on tariffs, making the retail $22.99, still an incredible value for a wine of that caliber, but you get the idea.

 

Although we hoped for a reversal, we didn’t expect the new administration to provide any relief to us wine lovers anytime soon.  On the country’s priority list, we figured, fine wine tariffs would have to wait for such things as pandemic removal, restoring the economy, getting kids back to school and infrastructure investments before any consideration was made for us lovers of European imports.

 

Then all of a sudden, the tariffs were lifted, albeit “temporarily” for four months while the Airbus/Boeing dispute hopefully resolves.  According to Wine-Searcher,

 

…within 48 hours during the first week of March all tariffs were lifted on all sides, and it happened in a direct phone call between European Commission President Ursula von der Leyden and US President Joe Biden.

 

"We were all shocked when we got a call from Nancy Pelosi's trade advisor this morning," said a jubilant Ben Aneff, president of the US Wine Trade Alliance, a grass roots organization created to oppose the tariffs. "It's amazing. Absolutely amazing. It's thrilling."

 

The deal is only a four-month cessation of tariffs on both sides. For that time, the US will no longer collect 25 percent tariffs on French, German and Spanish wines (as well as other products including cheeses and olive oil), and the EU will no longer collect 25 percent tariffs on US products including whiskey.  Aneff believes the two longtime allies will be able to finally settle the Airbus-Boeing dispute in that time and get back to the business of drinking each other's good stuff.”

 

So we’re cautiously optimistic that prices of our beloved imports will stabilize soon, and possible go lower.  In the meantime, I would advise that alcohol percentages on wine labels should be taken with a grain of salt, at least until the current stock of products wends its way through the supply chain.

 

In short, don’t automatically believe what you read on bottles of Sancerre.  Just happily drink it the next time you have a hankering for goat cheese and cold cracked crab.

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