The domestic wine industry warned the Trump administration Tuesday that Trump’s planned 100% tariffs on French products such as Champagne could cripple importers and retailers. The administration is considering the tariffs as a consequence of a fight with France over its taxes on U.S. high-tech companies.
“The impact of imposing additional tariffs on wine from France will be devastating,” the National Association of Wine Retailers told the U.S. Trade Representative’s Office in a statement filed Tuesday. It estimated that the proposed tariffs would result in the loss of $10.6 billion in revenue for wine retailers and 78,000 U.S. jobs.
In public hearings at the USTR’s office, individual retailers warned the tariffs could put them directly out of business. “I’ve already laid off one person just over uncertainty regarding the tariffs,” said Michelle DeFeo, president of New York-based Laurent-Perrier U.S., an importing company. She added that she was even more worried about what she may have to do next year.
James Federico, the chief financial officer of New York-based importer VINTUS, warned that the proposed tariffs would cost his company 80% of its European import business. “We will have to terminate people,” he said, warning that the situation would likely be repeated over and over again in other companies.
The Trump administration announced late last year that it would retaliate against France for its imposition of a digital services tax on companies such as Apple, Facebook, and Amazon. The tax takes 3% of revenue generated from users in France. The administration is concerned that France’s action will be replicated by other countries and is seeking to quash those efforts.
The administration proposed tariffs of up to 100% on French products totaling $2.4 billion in trade annually. The targeted items include cheese, sparkling wine, handbags, cosmetics, and other luxury goods associated with France.
The retailers argued that importing French wine and related products was a huge industry in the U.S. Champagne, they noted, is a product specifically associated with its namesake region in France. That is why when an effervescent white wine is produced elsewhere, such as in California, it’s called “sparkling wine” instead.
The already high prices for Champagne from existing tariffs and import costs mean that buyers will likely be unwilling to pay more, the retailers argued. Consumers typically only buy it for special occasions and would likely forgo it if the price doubles. They added that even if all those consumers switched to domestic products, U.S. production of sparkling wine isn’t nearly high enough to fill the gap. Wine grapevines take at least three years to produce viable harvests, so it would be years before production could catch up. Many vineyards would be reluctant to produce more sparkling wine due to uncertainty over how long the existing trade dispute with France will last.
Jenny Lefcourt, the founder of Jenny and Francois, noted that importing wine from France isn’t different from importing other products. The beverages may be considered luxury goods, but they need regular people to ship and distribute. “These are blue-collar jobs,” Lefcourt said. “I will lose my mortgage.”
[Read more: ‘The bottles are not in France’: China bought best Burgundy vineyards, Paris wine merchants say]
