Opinion Imagining an End to Wine Tariffs

Imagining an End to Wine Tariffs

President Biden has already shown he can multitask in his short time at the helm.
© BBC | President Biden has already shown he can multitask in his short time at the helm.
Joe Biden is in the White House, but what does that mean for an under-pressure wine industry?
By W. Blake Gray | Posted Friday, 22-Jan-2021

Now that America's long national nightmare has ended and Joe Biden is in the White House, the question a lot of wine industry folks are asking is: what about those wine tariffs?

I was just asked for my opinion on this issue by an exclusive French business newsletter that costs nearly €1000 a year. I have covered the wine tariffs as much as anyone, so I get why I was asked. But I don't actually know anything.

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My editor here at Wine-Searcher said: "Since when has not actually knowing anything been a barrier to incisive journalism?" [I was being ironic – Ed.] True enough. So, with the proviso that I have no actual information whatsoever, here's what I think the Biden administration might do.

I'm writing this on Inauguration Day and Biden is signing 17 executive orders to reverse Trump policies as I speak. But the wine tariffs are not among them, and that's a signal about where they rank on the priority list.

I think there's a pretty good chance the most recent round of wine tariffs will be repealed: the tariffs announced on December 31 on wines from France and Germany over 14 percent alcohol as well as brandies including Cognac and Armagnac.

Biden announced before taking office that he plans to reverse most if not all of Trump's last-minute executive orders. These tariffs aren't exactly one of those, as they was ordered by Trump's appointed United States Trade Representative (USTR) and not Trump himself. But philosophically they fit, as they are both punitive and political. Spain was not included in the new round of wine tariffs, and Germany doesn't make many wines above 14 percent alcohol, so the new round seems like posturing specifically against France, always a popular position for populist Republicans.

The question is, how long will it take these tariffs to rise to Biden's attention? My guess, and again I don't know anything, is that it might happen fairly soon, perhaps soon after his own USTR nominee is approved by the Senate. That said, his nominee, Katherine Tai, is a China expert who speaks Mandarin, so you can see where Biden's trade policy priorities lie. I think there's a good chance Tai will unilaterally rescind the December 31 tariffs, especially as US restaurateurs have made a good case that these tariffs will hurt US businesses more than French ones. It's just a question of bringing it to her attention, and in that I urge industry figures to plead the case to her that not only would rescinding the tariffs help our economy, it would also lower the temperature of our trade war with Europe.

The prior tariffs, on French, German and Spanish wines at or below 14 percent alcohol, I don't expect to go away soon. Nor do I expect them to go away unilaterally.

Bloc parties

With apologies to Canada, Mexico, Japan and the UK, the EU is probably our most important ally in the world. Historically, the EU has been a supporter of the US when appropriate, and a reasonable voice of dissent when the US has overreached. Biden is considered a foreign-policy expert: when he ran for president in 2008, that was his strength, and it was a reason that relative novice Barack Obama chose him to be Vice President.

Biden will want to repair our fractured relationship with the EU. But at the same time, strategically, he also knows he has some leeway there. The US' biggest foreign policy challenge is China, which seems to be outmaneuvering us at every turn because its leaders take the long view while we always focus on the next quarter's results. Second is Russia, which not only has hacked the entire US government's computer systems, but also likely now has moles in every government agency. Iran is a problem: do we try to re-enter the nuclear deal, even though Iran has moved past it technologically since we walked away? Israel is a problem, with its right-wing emboldened by Trump's support to take actions like new settlements that most presidents disapprove of. What's Biden's relationship going to be like with Saudi Arabia, an important and steadfast US ally that faced no consequences for murdering Jamal Khashoggi?

The sponsors of the American boat in the Americas Cup challenge put the Boeing-Airbus dispute into perspective.
© Team America | The sponsors of the American boat in the Americas Cup challenge put the Boeing-Airbus dispute into perspective.

Looking at that pile of crises – it doesn't even include Afghanistan or Iraq – it's easy to see Biden and his secretary of state nominee Antony Blinken telling EU leaders,: "We're back, it's great to be on the same page again, but give us a minute here." The Airbus-Boeing trade dispute that led to the wine tariffs started in 2006, but it never actually caused a strain in US-EU relations until Trump took over. It is, compared to other American foreign policy problems, very minor. Everyone expects the US and EU to get along now, and just that expectation might slow the hard work of resolving a 15-year trade dispute.

The irony about the trade war over aircraft is that the resulting tariffs on aircraft are lower than the tariffs on wine and cheese. That's crazy, right? But it's also how people feel about aircraft. I have met, on both sides of the Atlantic, passionate Francophiles who only drink French wines. Same with Italian wines. I have also met Americans who only drink American wines. But I have never met one single American who refused to fly on an Airbus jet, or a European who wouldn't fly on Boeing. Both companies are so enormous that the trade war doesn't seem to matter to them.

And look at the photo we dug up from the America's Cup race, currently in its preliminary stages in New Zealand. The New York Yacht Club, representing the US, is sponsored by ... Airbus! Patriotism takes a back seat to money, though to be fair that is the American way.

Mending fences

Anyway, I do think Biden will want to make some recognizable gesture to Europe. He does want the good relationship we usually enjoy. But aircraft aren't the only thing the two sides are currently fighting over. In 2017 Trump imposed tariffs on EU steel and aluminum, prompting the EU to respond with tariffs on American whiskey and Harley-Davidson motorcycles. But that dispute isn't as new as it seems either, as George W. Bush ended a prior dispute with the EU over steel in 2002 by dropping tariffs.

I believe that Biden and EU leadership, when they find time to get together in a room, will decide that these trade wars aren't helping either side, and that we are better as allies than adversaries. I would not be at all surprised for a joint announcement to come from the next big US-EU summit meeting that all tariffs are being dropped on all sides. That is my I-know-nothing prediction.

The only question is when. My guess is sometime this summer. Biden proved on his first day in office that he can multitask – but he also showed that, to him, this trade issue can wait.

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