The Latest Trade War Could Kill The American Champagne Market

By Neat Pour Staff |

Donald Trump is a teetotaler…. which might explain his tendency to wreak havoc on the American alcohol markets by entangling wine, beer, and spirits in his trade wars. On Monday (12.02), the POTUS turned this habit up to 11 by floating a 100% tariff on champagne (and cheese!) in retaliation for a French tech tax.

The spate began this summer when France enacted a 3% tax on tech companies with global revenues of more than €750m ($830m), with at least €25m ($28m) generated in France. (So, basically, Google, Facebook, Amazon, etc.) At that time, Trump threatened retaliation, but a 90 day truce was declared to allow for negotiations. Alas, three months later, no agreement was finalized and the administration decided to forgo the carrot for the stick.

The White House labeled the tech tax “discriminatory” this weekend. Then, US Trade Representative Robert Lighthizer released a list of proposed retaliatory tariffs.

In addition to fashion accessories and cheese, the roster of regulation included a 100% tax on all French sparkling wines including the most famous of the batch. If the law went into effect, a bottle of Veuve Clicquot Brut aka “Yellow Label” would cost about $100 in the States. Understandably, critics are positing that if enacted the duties could destroy the market for champagne in then U.S.

Mind you, French wines are already subject to a 25% duty. That charge was enacted in October resolving a long running dispute over unfair European subsidies to Euro plane manufacture Airbus.

The previous round of taxes was sanctioned by the World Trade Organization (WTO) and the French grudgingly accepted them. However, the latest round, targeting champagne, was a bridge too far.

“If there are any new American sanctions, the European Union will be ready to hit back. Yesterday we made contact with the European Commission for assurances that should there be any new sanctions, there would be a European response, a strong response,” said French Finance Minister Bruno LeMaire.

Still, all hope is not lost. The proposed tariffs are open to public comment until January 8. Such comment periods have not really moved the dial during the Trump presidency, but then again, the current POTUS does relish being unpredictable. Plus. trade representatives from Europe and the U.S. continue to talk and there is the prospect of a resolution.

Still, it’s probably a good idea for consumers and retailers alike to stock up on French bubbly now—before any price hikes.

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