In response, the United States placed a 25 percent tariff on wines below 14 percent alcohol from France, Germany, Spain and the United Kingdom, along with various European whiskeys, cheeses, olive oils and other foods. The additional tariffs that took effect in January include wines from France and Germany above 14 percent alcohol, and other beverages. Sparkling wines have so far been excluded.
The Trump administration has never explained why it targeted wine and food in a dispute over aviation equipment. Indeed, while aircraft parts were also subject to tariffs, they were taxed at a far lower rate, 10 to 15 percent, than the 25 percent on food and drink.
Economists may argue over the efficacy of using tariffs as a tool in international trade, but these particular tariffs have caused more harm to small American businesses than they have to the countries they were intended to penalize.
According to the U.S. Wine Trade Alliance, an organization representing the wine trade, American imports of wines from the four countries affected by the tariffs over the first five months of 2020 dropped by nearly 54 percent compared with the first five months of 2019.
Data compiled by Gomberg, Fredrikson & Associates, a wine industry analyst, demonstrated that for every dollar’s worth of wine not imported because of the tariffs, consumers spent $4.52 less at American distributors, retailers and restaurants.
It’s difficult to calculate the precise effect of the pandemic on these figures. Many European wine producers hit by the tariffs simply found other markets for their products, said Ben Aneff, the managing partner of Tribeca Wine Merchants in New York and president of the trade alliance.
In an additional move that seems thoughtless at best and spiteful at worst, the Trump administration did not exclude goods in either round of tariffs that had already been purchased by American businesses months and, for some, years in advance and were in transit to the United States. That required those businesses to pay the entire duty when the goods passed through customs, with no effect on the foreign businesses the tariffs were supposedly meant to penalize.