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According to an official document published on Tuesday night, the Trump administration is considering imposing additional punitive taxes on $3.1 billion worth of European products, including French luxury goods. A measure that risks to compromise the exports of French wines and spirits to the United States and that threatens major luxury groups such as LVMH, Remy Cointreau or Pernod Ricard.
Trade war: customs duties, Trump’s favorite weapon
New power struggle between the United States and France over customs duties.
After a series of customs hikes last October, Donald Trump reiterates and the services of the US Trade Representative have just listed the new products concerned in a call for public consultation which will last until July 26.
These punitive taxes have been authorized by the World Trade Organization for products imported from the EU for up to 7.5 billion dollars, as part of the tricky and never-ending issue of subsidies to the European Airbus and the American Boeing.
Indeed, it was in the context of a dispute over Airbus subsidies that the White House had already taxed French products several times, but also in order to ” take revenge ” on France’s desire to tax the GAFA, the American technology giants.
The new French products targeted (they also come from Spain, the United Kingdom and Germany) can be taxed at up to 100% and include olives and coffee as well as pastries and yoghurts, but also luxury products emblematic of France and its values such as wines and spirits.
Additional taxes that could have catastrophic economic consequences and threaten to weaken France significantly.
Fall in exports and deterioration of the economic context
French wines are being targeted for a simple reason: the United States is the number one foreign market for our wines and spirits.
However, the increase in customs taxes last October had a direct impact on French wine exports the following month: – 44% in November. And over the last quarter of 2019 as a whole, wine exports to North America fell by 17.5%.
The Federation of Wine and Spirits Exporters (FEVS) has also announced a 26% drop in sales in value for French wine and spirits exporters to the United States over the first five months of application of the American sanctions (from the end of October to the end of March) due to persistent fears among American importers of increasingly expensive products. “We are importing less Loire wine than before, less Burgundy, less wine from the colder regions of France” says Steve Melchisey, founder of US importer Wine West, noting that the threat is now “existential” for these productions.
The Federation also estimates that the cost of 300 million euros per year, assessed in February 2020 by an independent firm, is confirmed.
At its General Assembly on June 24th, the FEVS then expressed the strong concern of its members regarding 2020 because now the spectre of the global economic crisis is added to the effects of the Trump tax, Brexit and tensions on the Chinese market.
The Champagne sector is already estimating a drop in bottle sales of 30 million this year due to the Covid-19 pandemic. Faced with this unprecedented situation, the choice of the yield quota per hectare for the next harvest is even more difficult than usual … whereas more than half of the Champagne is bought abroad and it is the second largest French export sector just behind the aeronautics industry.
French winegrowers and alcohol producers, overwhelmed by a surplus of at least 3 million hectolitres of unsold wine after the containment and new American taxes from Trump, are likely to have a hard time recovering and groups such as LVMH, Remy Cointreau or Pernod Ricard, leaders in the sector, could severely suffer.
France, the world’s second-largest producer behind Italy in terms of volume and the leading exporter in terms of value, could then respond with taxes on American products, raising fears of an escalation.
Read also > Wine & spirits : Moët Hennessy appoints new managing director for UK and Ireland
Featured photo : © Rémy Cointreau[/vc_column_text][/vc_column][/vc_row][vc_row njt-role=”not-logged-in”][vc_column][vc_column_text]
According to an official document published on Tuesday night, the Trump administration is considering imposing additional punitive taxes on $3.1 billion worth of European products, including French luxury goods. A measure that risks to compromise the exports of French wines and spirits to the United States and that threatens major luxury groups such as LVMH, Remy Cointreau or Pernod Ricard.
Trade war: customs duties, Trump’s favorite weapon
New power struggle between the United States and France over customs duties.
After a series of customs hikes last October, Donald Trump reiterates and the services of the US Trade Representative have just listed the new products concerned in a call for public consultation which will last until July 26.
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According to an official document published on Tuesday night, the Trump administration is considering imposing additional punitive taxes on $3.1 billion worth of European products, including French luxury goods. A measure that risks to compromise the exports of French wines and spirits to the United States and that threatens major luxury groups such as LVMH, Remy Cointreau or Pernod Ricard.
Trade war: customs duties, Trump’s favorite weapon
New power struggle between the United States and France over customs duties.
After a series of customs hikes last October, Donald Trump reiterates and the services of the US Trade Representative have just listed the new products concerned in a call for public consultation which will last until July 26.
[…][/vc_column_text][vc_cta h2=”This article is for subscribers only.” h2_font_container=”font_size:16″ h2_use_theme_fonts=”yes” h4=”Subscribe now!” h4_font_container=”font_size:32|line_height:bas” h4_use_theme_fonts=”yes” txt_align=”center” color=”black” add_button=”right” btn_title=”I SUBSCRIBE!” btn_color=”danger” btn_size=”lg” btn_align=”center” use_custom_fonts_h2=”true” use_custom_fonts_h4=”true” btn_button_block=”true” btn_custom_onclick=”true” btn_link=”url:https%3A%2F%2Ftest2023.luxus-plus.com%2Fen%2Fabonnements-et-newsletter-2%2F|||”]Unlimited access to all the articles and live a new reading experience, preview contents, exclusive newsletters…
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