US considers 100% tariffs on European wine

Having proposed tariffs of up to 100% on certain French goods earlier this month, the US government has now said it may up its tariffs on European wine and Scotch as part of an ongoing dispute over subsidies given to Airbus.

In early October, The United States Trade Representative (USTR) announced that it would raise tariffs on products from Europe, including wine and Scotch whisky, by 25%. The move was in response to subsidies given by the EU to Airbus over rival US aviation company Boeing.

The tariffs received formal backing by the World Trade Organisation (WTO) on 14 October. 

In an announcement published on 2 December, the USTR reported that the WTO had rejected the EU’s latest claims that it had complied with regulations by making changes to its Airbus subsides.

The USTR noted that in light of “the lack of progress in efforts to resolve this dispute”, the US government had begun the process to increase the rate of tariffs already imposed, as well as subjecting additional EU products to the tariffs.

On 12 December, an updated list of goods was published including a list of products currently subject to additional duties, and a further list not currently subject to tariffs, which is under consideration for duties of “up to 100%”.

The items currently subject to 25% tariffs include still wine (not over 14% ABV) made in France, Germany, Spain and the UK, transported in containers of 2 litres or less; liqueurs made in Germany, Ireland, Italy, Spain and the UK; and Scotch. These products, the US government said, could be subject to further tariffs.

Wines from Italy and Portugal are now being considered as part of a new proposed list. The proposed list also mentions bulk wine, fortified wine and sparkling wine, as well as other whiskies made in Europe, most notably Irish whiskey. Gin, vodka and rum do not appear on the list.

Products not subject to tariffs, but that are under consideration, include sparkling wine, Marsala (in containers holding 2 litres or less), wine (less than or equal to 14% ABV in containers holding no less than 2 litres but not greater than 10 litres; over 14% ABV in containers holding no less than 2 litres but not greater than 10 litres; less than or equal to 14% ABV in containers over 10 litres; over 14% ABV in containers over 10%); fermenting grape must; brandy (in containers not over 4 litres not over US$2.38/litre; in containers not over 4 litres valued at $2.38-$3.43/litre; in containers not over 4 litres valued at over $3.43/litre; over 4 litres not over $2.38/litre; in containers over 4 litres, over $2.38/litre); whiskies other than Scotch or Northern Irish whiskey; and non-alcoholic beer.

As well as France, Germany, Spain, and the UK, products hailing from Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia and Sweden are now included.

The full list of items can be viewed here. 

This follows news earlier this month that the US government had proposed tariffs of up to 100% on French goods, including sparkling wine, cheese and handbags, valued at US$2.4 billion in retaliation to a French tax placed on American tech companies.

France’s digital services tax, dubbed GAFA (an acronym for ‘Google, Apple, Facebook and Amazon’), would impose a 3% levy on the total annual revenues of the largest global technology companies providing services to French consumers.

On 2 December, the U.S. Trade Representative stated that the first stage of its investigation under section 301 of the Trade Act of 1974 found that the French tax discriminates against US-based companies and is “inconsistent with prevailing principles of international tax policy”.

The USTR is also exploring whether to open Section 301 investigations into the digital services taxes of Austria, Italy, and Turkey.