PARIS (Reuters) – The U.S. decision to impose tariffs on French wines will penalize American consumers who will see a sharp rise in prices while severely hurting French producers on their largest export market, exporters said on Thursday.
Bottles of red wine are seen in the cellar of Chateau Le Puy in Saint Cibard, France, October 3, 2019. REUTERS/Regis Duvignau
The United States has said it will impose 25% duties on an array of European foodstuffs as part of Washington’s response to illegal EU aircraft subsidies.
The announcement came after the World Trade Organization gave Washington a green light to impose tariffs on $7.5 billion worth of EU goods annually in the long-running case.
“We feel hijacked by these retaliatory measures that go against free trade,” French wine exporters’ federation FEVS Chairman Antoine Leccia told reporters.
The higher tariffs would immediately raise prices by $5 to $10 per bottle. To avoid losing market shares, exporters may need to cut prices, which will threaten many producers, Leccia said.
French wine exports to the United States totaled $1 billion in 2018, or about 20% of total exports. Champagne is not targeted by the extra duties.
Of this, Bordeaux wines accounted for more than a fourth of exports, followed by closely by the Bourgogne and Beaujolais origins.
Wine bottles sold at prices below $30 would be first hit because the higher price would prompt consumers to turn to cheaper wines from other origins, Leccia said.
“We can expect significant fall in sales that could be as much as 50% for wines below $15 because it will be very easy to turn to a Chilean or an Italian wine,” he said.
FEVS called on French and European Union authorities to negotiate and find a solution to the dispute, that comes just as exporters are stepping up preparations for a possible departure of the United Kingdom from the EU without a deal.
“It’s bad news, especially at a time when we already have to deal with Brexit. Dark clouds are gathering on the horizon.”
Reporting by Sybille de La Hamaide and Gus Trompiz; Editing by Lisa Shumaker; Editing by Andrew Heavens and Lisa Shumaker