US tariffs on European wines and spirits were suspended for five years on Tuesday as the US and EU edge closer to ending their 17-year trade war over airplanes.

This is unquestionably good news for consumers, as 25 percent tariffs on wines from France, Spain and Germany would have resumed on July 11 if an agreement had not been reached.

Don't expect wine prices to go down, though. Most importers and distributors have been absorbing some of the costs of the tariffs. Your discount will be not having to pay more.

"Prices on rosé would be much higher had the tariffs still been in place," said Ben Aneff, president of the US Wine Trade Alliance. "If you're a Burgundy lover or a Bordeaux lover, we saw lists of wine offered [to retail stores] with both tariffs and without tariffs. Thankfully, importers will be able to use the sans-tariffs prices."

Aneff, managing partner of Tribeca Wine Merchants in New York, has transformed himself over the last two years from a wine expert into an expert on civil aviation and trade disputes, as the US wine industry came together to push back against the tariffs. Aneff said the most important aspect of Tuesday's deal was not the ceasefire, but the less-noticed framework for future negotiations.

The United States Trade Representative (USTR) published a press release outlining the framework. The two sides will create a working group that will meet at least every six months to work through disagreements on any government aid to airplane manufacturers. A key point is that both sides agreed that any loans to aircraft companies will be made at market rates.

Aneff said that US President Joe Biden's team had hoped to be able to reach a final agreement that could be signed while Biden is currently on his first Presidential visit to Europe, but the issues were too complicated for that. Instead, they made a deal to avert the tariffs from being reimposed next month.

"It would have been a big disappointment if they had only announced a five-year suspension, after all of this work," Aneff told Wine-Searcher. "While they haven't put this issue to bed entirely, they've announced a new framework that will allow them to work out differences in the future. This shows that not only do they not want the tariffs to come back; they don't want tariffs like this in the future. They wanted to give the industries long-term security going forward."

Not done yet

That said, a five-year suspension is still not a final agreement. This deal will expire in 2026, two years after the next US Presidential election. The trade war over airplane subsidies had simmered through two US presidencies before Donald Trump escalated it into a tariff fight. It's not impossible that Trump, or a Trump acolyte, will be back in the White House in 2026.

Moreover, the US and EU haven't put all their trade battles to rest. A dispute over steel prices is unresolved. While the US threatened no tariffs on alcohol in that dispute, the EU imposed 25 percent tariffs on US whiskey, and those tariffs are still in place. US whiskey exports to the EU dropped 37 percent as a result, according to the Distilled Spirits Council.

European Commission President Ursula von der Leyen said in a statement that the EU had planned to level more tariffs on US products in the steel dispute, but agreed to pause for six months in order to reach this agreement on Airbus and Boeing.

"I do believe the USTR and the Biden administration in general want to go back to a system of cooperation with our strongest allies," Aneff said.

One remaining spirits issue from the Airbus-Boeing dispute is US tariffs on Scotch and Northern Irish single-malt whisky. They were suspended for four months like the tariffs on wine, but an agreement on a longer suspension has not yet been announced. The UK was part of the EU when the disputed subsidies to Airbus occurred. Biden has met with UK prime minister Boris Johnson on his European visit and it's likely a longer tariff suspension will be announced soon, but it has not happened yet.

The dispute started in 2004, when the US filed a complaint with the World Trade Organization about EU subsidies for Airbus and the EU filed a similar complaint about US aid to Boeing. The WTO ruled several times that essentially both sides were in the wrong, but tariffs were not imposed until 2019.

Also unresolved is a US trade dispute with several countries over digital services taxes. That dispute has seen the US impose tariffs on wine glasses from Austria, but not on wines themselves.

Aneff says that he hopes the tremendous pushback from the US wine and restaurant industries against the wine tariffs has taken wine off the table as a tool for future trade wars.

"We're hopeful that enough members of both parties learned to despise these tariffs and learned how much damage they do to small business across the US," Aneff said. "The big consequence we would have seen would have been a real drop in consumer choice. Had the tariffs stayed on we would have seen loads of small US importers go out of business. All the small-production wines they import would have been off of store shelves. This golden era we've lived in, where consumers in the US have more choice than any other market in the world, that would have come to an end."

Instead, it's time to pop those corks and hope five years doesn't pass too quickly.

Source: WineSearcher