The 17-year old trade dispute between the European Union and the U.S. may be coming to an end as the two sides agreed to suspend tariffs on each other’s products. President Joe Biden and European Commission President Ursula von der Leyen agreed to the move on a call Friday.
The epic trade war started in 2006 as a fight over illegal subsidies to Airbus SE and Boeing Co. and has resulted in duties that target a combined $11.5 billion in transatlantic trade and affect a range of industrial, agricultural and consumer goods, reports Bloomberg.
In October 2019 the Trump Administration took the battle to a new level, imposing 25% tariffs on wines under 14% alcohol from France, Spain and Germany. When the European Union imposed its own tariffs late last year on a wide range of American products, the White House retaliated by extending the tariffs to French and German wines over 14% alcohol too.
As a result, European wine exports to the U.S. have fallen dramatically. According to the U.S. International Trade Commission, imports of French wine from January to June of 2020 were down more than 50% compared to the same period last year. Spanish wine imports were down 60%, states an article published in Wine Spectator. However, the tariffs have also caused economic pain for American importers and retailers, at a time when the ongoing pandemic has made business hard enough.
The decision to pause the tariffs for four months will bring economic relief to European winemakers, American merchants and wine consumers. Moreover, according to Myron Brilliant, the Executive Vice President and Head of International Affairs at the U.S. Chamber of Commerce, the move is a “hopeful signal” that a negotiated settlement that will permanently remove the tariffs is close, says Bloomberg.
“We’re finally coming out of the trade war between the U.S. and Europe, which only creates losers,” French Finance Minister Bruno Le Maire said on his Twitter account. “I’m pleased for our French wine makers. Let’s keep going down the path of cooperation to get to a definitive agreement. In this crisis period, it must be time for reconciliation.”
However, as the tariffs’ suspension will lead to the return, albeit temporarily, of US demand for fine wines, the prices of readily available wine stock are likely to be driven up.
The U.S. has also promised to suspend retaliatory tariffs on U.K. products caught up in the aircraft-subsidy dispute in a boost for post-Brexit Britain’s trade agenda. The decision means goods like Scotch Whisky, biscuits and clotted cream can be imported to the U.S. from Britain without being subject to an additional 25% duty.