WASHINGTON – The Trump administration has said it will target more French and German wines and spirits with 25% tariffs from January 12, as part of the latest escalation in a linked tit-for-tat tariff fight to a long-standing dispute over subsidies for commercial airliners.
Among the new levies, the United States will for the first time apply the 25% levies on wines from France and Germany that exceed 14% alcohol, which were previously exempt, according to the office of the U.S. trade representative.
“With especially what is happening in light of the pandemic, with restaurant and distillery closures, now is just not the right time to hit an industry that is already facing the economic impact,” Christine LoCascio, head of public policy for the Distilled Spirits Council of the United States, said Thursday.
Washington imposed 25% tariffs on wine from France, Spain, Germany and the UK in October 2019 in retaliation for subsidies given to European aircraft maker Airbus SE, arguing that they are harmful to Boeing. Co.
Other products that will be subject to new tariffs are high-end cognacs that cost $ 38 per liter and up, and some aircraft manufacturing parts, from France and Germany. High alcohol wines from Spain and the UK were not added to the latest list.
The USTR has said in a regulatory filing that the additional tariffs target products from France and Germany because the two countries provided the highest levels of WTO-inconsistent subsidies.
The US and the EU are in a long-standing dispute over what every claim is unfair government subsidies to commercial aircraft manufacturers: Airbus in Europe and Boeing in the US
The battle recently unfolded in the tit-for-tat tariffs on consumer products.
In October 2019, the United States imposed tariffs on products worth $ 7.5 billion on wine, cheese and other European products. In retaliation, the EU last month announced tariffs on US goods worth $ 4 billion, including Boeing jets, spirits, nuts and tobacco.
The USTR said in a press release on Wednesday that the latest addition to its tariff schedule comes as the United States makes adjustments after the two sides used different benchmarks for trade data to determine products. to be covered by tariffs.
The USTR said that while the United States was using data from the previous calendar year, the EU had used a period when trade had been drastically reduced due to the Covid-19 pandemic.
This allowed Europe to impose tariffs on “a lot more products” than it could have done with the calendar year method, the USTR said. After the EU refused to change its approach, the USTR said it decided to change its own reference period and add more products. The addition will not change the $ 7.5 billion total value of products affected by tariffs, the USTR said.
An EU spokesperson said the choice of the base period for the EU’s tariff measures was based on the most recent trade data available, in line with long-standing WTO practice. The spokesperson said Washington is “unilaterally disrupting” ongoing bilateral negotiations to find a settlement to the air disputes.
“The EU will engage with the new US administration as soon as possible to continue these negotiations and find a lasting solution to the dispute,” he said.
The escalating tariff fight highlights challenges in US-EU trade relations, even as European officials call for improved relations under the incoming administration. The digital taxes imposed on American technology companies by France have become a major cause of tension. The EU’s signing of an investment deal with China this week has raised concern among US trade officials as they seek European cooperation to counter China.
The impact of tariffs has been considerable. Imports of wine from France fell 54% in the first five months of this year from a year earlier, while those from Germany fell 42%, according to the US Wine Trade Alliance.
“These tariffs are ravaging American restaurants and small businesses at the worst possible time,” said Ben Aneff, chairman of the group. “It underscores how important it will be for President-elect Biden to quickly repeal restaurant prices and find ways to influence the EU more effectively while causing less damage to businesses here.”
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