Transatlantic trade war effects

Manhattan, New York

How the wine trade is responding to the new US tariffs.

US imports of French, Spanish, German and English wine (but not Italian wine, curiously), plus single malt whisky, are being penalised, along with a wide array of other European products, with an additional 25% tariff imposed on 18 October in response to a World Trade Organisation ruling on subsidies for the French aircraft manufacturer Airbus plus a complex EU/US dispute involving steel and aluminium.

Of course it is having a crippling effect on the Scotch industry, and is also resulting in all sorts of ingenuity on the part of European wine exporters. The tariff applies only to wines not over 14% alcohol and, strangely, to those packed in volumes of less than two litres.

So wine analyses are rapidly being redone, nudging official alcohol levels that might originally have been rounded down to 14% over the 14% limit. American wine buyers should expect to see a dramatic increase in the number of French and Spanish wines weighing in on the label at 14.1% alcohol. (See, for example, this short piece in English in the French online magazine Vitisphère.) 

Apparently in Bordeaux there has been some serious consideration of bottling more wine in large formats, or even shipping in bulk to the US. And since the new tariff is an ad valorem tax, massive amounts of fine wine were air freighted across the Atlantic from Europe in order to reach the US before the 18 October imposition of the tariff. The cost of air freight is tiny compared with a quarter of the value of a bottle of first growth Bordeaux.

Those who have suffered most have been those whose shipments were already in transit when all these new tariffs were announced in early October, so had no time to take defensive measures.