Wine becomes casualty in Trump’s trade war with European Union

President Trump’s burgeoning trade war with the European Union has ensnared the wine industry in the economic squabble, a development vintners on both sides of the Atlantic Ocean have decried.

The risk, of course, is that the EU will turn around and slap import taxes on American wines, most of which are produced in California.

Jim Clerkin, CEO of Moët Hennessy North America, said that there is “no doubt in my mind” that Europe will retaliate against American winemakers. Moët has assets in the North Bay with Yountville’s Domaine Chandon and has a Smoke Tree brand that uses Sonoma County grapes.

“I fear that it will be a challenging time,” Clerkin said. “I think it’s not good for the industry. ... Who knows when the tariffs come back off again?”

The Trump administration on Oct. 18 plans to impose tariffs on $7.5 billion worth of European imports, including a 25% levy on bottled table wine from France, Spain, Germany and the United Kingdom, according to the U.S. Trade Representative’s Office. Sparkling and bulk wines, Italian wine and varieties with an alcohol content of 14% or more won’t be subject to tariffs.

The U.S. made the move in retaliation for the EU subsidizing aviation giant Airbus for several years. On Wednesday, World Trade Organization cleared the way for the U.S. to attach a 10% import tax on European aircraft, as part of the long-running transatlantic feud over the EU unfairly assisting Airbus in its competition with American rival Boeing.

The Trump administration, however, broadened the tariffs to include other European goods from wine to cheese. The escalation opens a new front in the trade wars Trump has been waging with China and others, actions economists have said are hindering the global economy and raising fears of a recession. The EU is the largest export market for American wineries with $469 million worth of wines - 90% of that produced in California - shipped to Europe last year.

Bobby Koch, president and CEO of the Wine Institute, the state’s main lobbying group for the sector, said in a statement he feared retaliation by the EU would “set back our efforts to continue growing U.S. wine exports.”

In 2018, EU wine exports to the United States were worth $4.1 billion, making America the largest foreign market for European companies. Still wines from French, German, Spanish and United Kingdom producers represented $1.5 billion, or 36% of the total.

Even though there are trade disputes between American and European vintners over issues such as the use of semi-generic wine names such Champagne, neither party wanted to stoke a trade war since both export heavily to each other.

Jean Marie Barillère, president of the European Wine Companies Committee, which represents European wine companies, said of Trump’s planned 25% tariff: “We regret this decision that harms directly EU wine companies, but not only, as our U.S. importers and consumers will also be affected by the new tariffs. We’ll continue to support the European Commission and member states in their effort to find a negotiated position.”

There are some wine producers that think the United States is on an uneven playing field globally.

Rick Tigner, president of Jackson Family Wines of Santa Rosa, said he hopes the federal government would continue to push to lower export barriers in foreign countries, noting he was pleased with the recent trade agreement between the Trump administration and Japan that will eliminate the 15% tariff on U.S. wine imports over the next seven years.

“I think America sets a good example about how to treat imports. I want other countries to treat us the same way,” Tigner said.

Koch of the Wine Institute said the group has “always supported the fair, open and reciprocal trade of wine around the world. Consumers worldwide have embraced California wines because of our premium quality, diverse offerings and leadership in sustainability.”

You can reach Staff Writer Bill Swindell at 707-521-5223