French wine suffers as US tariffs take effect

Imports and Exports | | MIC Customs Solutions |

Wine producers in France are finding US tariffs have already begun to bite.

The French wine industry has already begun to suffer as a result of tariffs imposed on its products by the US, which took effect late last year.

This is according to an announcement by deputy foreign minister Jean-Baptiste Lemoyne, who told AFP exports of the beverage had dropped 44 per cent in value in November 2019 compared to the previous month.

US president Donald Trump imposed 25 per cent levies on a range of European products as part of a long-running row over subsidies to plane manufacturer Airbus. The US argued loans made by the EU to Airbus for aircraft development represented an unfair advantage.

The World Trade Organisation upheld the complaint, leaving the US free to impose retaliatory tariffs on France, Britain, Germany and Spain, which came into effect in mid-October 2019.

Earlier in the week, whole-year figures on French wine and spirits exports for 2019 had appeared to show a positive trend, with the Federation of French Wines and Spirit Exporters showing sales abroad were up a record 5.9 per cent to €14 billion.

Shipments to the US - the largest overseas market for French wines - were also up 16 per cent to €3.7 billion.

However, this now seems to have been a result of exporters hurrying to book sales in anticipation of the tariffs. Indeed, US Census Bureau data also shows American imports of French wine to have plunged to $57 million (€50 million) in November, from $130 million in October.

Mr Lemoyne said the new data has come as a "shock" for growers and is now calling for the EU to provide compensation for the losses.

The tariffs were found to have been particularly damaging for producers at the lower end of the market, who have seen their products turn from an everyday purchase into a luxury.

Bernard Farges, president of the Bordeaux Interprofessional Wine Council, told Wine Spectator: "In six months, the American market will be dead for us."

The news is likely to be worrying for producers in other industries too, as the tariffs also affected Spanish olive oil, Scottish whiskies, German tools and British cashmere, among other items.

Furthermore, Mr Trump has threatened to extend the levies by up to 100 per cent and to target sparkling and fortified wine made in all EU countries in a further trade spat over digital companies.

One wine merchant, Georges Haushalter, told Wine Spectator some exporters have shipments ready to go to the US, but are being told by clients to delay because they can no longer afford the products.

Companies are now awaiting a response from the EU concerning what might be done next concerning losses and compensation.