In September, the World Trade Organization (WTO) ruled in favor of the US on the aircraft subsidies which opened the door to the US levying duties on mostly agricultural European products with an annual value of 7.5B USD. The first round of tariffs in October hit still wines and olive oils from France, Germany, Spain and the United Kingdom as well as cordials and liqueurs from Italy, Ireland, Spain, Germany and the United Kingdom with a 25% increase. Single-malt Irish and Scotch whiskies were also included.
While the affected industries were hopeful for a swift agreement to end the higher duties, recent political developments have sparked more tariff proposals for next year. The US will target French products, including sparkling wines and cheeses, in response to France’s Digital Service Tax and the second round of the aircraft subsidies tariffs will expand the size and scope – all types of wines, brandies, liqueurs, whiskies and olive oils from the 28 EU member countries.
Impact in the wine sector
Some larger wine and spirits groups took precautionary measures several months ago to avoid the tax increase by transferring stock in advance. In the off-premise trade, retailers will have to consider whether to absorb additional costs or pass them on to customers.
Caroline Dewhirst, Sales Director Hillebrand USA says “In general, we see discussions taking place between all parties in the supply chain to spread the extra cost and not impact the end customer."
What’s next?
The main questions now are when will the next rounds of tariffs be effective, for which products and origins, and at what duty rate? Barring any delays to procedural hearings, these could be put into place near the end of the first quarter in 2020.
How can Hillebrand help?
Considering the broader reach the next stage of tariffs, moving inventory in the first few months of the year will be critical.
If product quantities are available for full container load shipping, importers may want to explore warehousing options (at origin or in bonded or FTZ facilities at destination).
For smaller volumes, moving to our more frequent services for small orders, is another way to be more flexible in managing inventory costs. Visit our beverage only service sailing schedules for upcoming departures.
For more information on how we can support your business through these changes, contact your local Hillebrand office.
Last updated: December 2019
