US taxes: the wine industry asks for support from the French government

A few months ago, Donald Trump, the President of the United States, had already threatened to impose higher taxes on European wines, particularly French wines, sold in his country. His threat was carried out this month. Since October 18, 2019, customs duties on many consumer products have been increased from 10% to 25%. Some products are more affected than others, which is unfortunately the case for wines from French wine-growing regions. For these, the increase is 25%. However, wine is France's second largest export. For professionals, these new taxes are particularly worrying, especially as they will also suffer the effects of Brexit. That is why they recently asked the government to quickly put support measures in place.

A sharp rise in customs duties is causing concern in several wine-growing regions

For professionals in the wine industry, this 25% increase in customs duties is very bad news. Admittedly, it was not unexpected, as the US president had already mentioned it. But this 25% rate is quite hard to swallow. French wines are not the only ones affected; wines from Spain, Germany, and the United Kingdom are also impacted. Nevertheless, in France, this sanction is likely to have serious consequences, particularly for regions that export mainly to the United States. For example, producers of Chablis expect their sales in the United States to fall by half because this new tax will increase the price of their bottles. And in general, this American sanction will impact the entire industry because the United States is the leading export market for French wines and spirits, accounting for €3.2 billion in sales.

Why did the United States impose sanctions?

For those involved in the French wine industry, this tax increase is all the more difficult to accept as they are "collateral victims of a conflict that is not ours," as stated by Antoine Leccia, president of the Federation of Wine and Spirits Exporters. This is why, on Friday, October 18, they asked the government and the European Commission for support measures to open negotiations with Washington. In fact, these US sanctions follow subsidies granted to Airbus. From now on, the company's aircraft will cost 10% more in the United States. However, Donald Trump believes that with these subsidies, Europe is penalizing American companies (Boeing in this case) by introducing "enormous barriers" designed to reduce imports. As a result, he has decided to increase customs sanctions on many products, including wine. Last Monday, October 14, he obtained the agreement of the World Trade Organization, and a few days later, on October 18, the sanctions came into effect. Professionals are now waiting for responses from the French government and the European Commission, but as Bruno Le Maire has indicated, an "amicable resolution of the Boeing/Airbus dispute" is needed. In the meantime, the wine industry will have to get organized.