What A Fight Between Airplane-Makers Means For French Wine
SCOTT SIMON, HOST:
The holidays are coming. That means celebrations for Christmas, Hanukkah, Kwanzaa and BJ Leiderman, who writes our theme music. But this year, you'll probably pay more for European wines and cheeses because of a 15-year trade dispute between the U.S. and Europe about their rival plane-makers. NPR's Eleanor Beardsley tells us more.
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ELEANOR BEARDSLEY, BYLINE: The centuries-old Burgundy village of Pommard might seem like a strange place for the Airbus-Boeing rivalry to be playing out. But since the World Trade Organization ruled that the EU had unfairly subsidized its plane-maker, the U.S. has been authorized to retaliate with $7.5 billion in tariffs. And Burgundy wines are one of President Trump's top targets.
MICHAEL BAUM: He only put a 10% tariff on Airbus aircraft and parts coming into the United States, but he put a 25% tariff on Italian cheeses, French wines, Scottish single malt whiskeys.
BEARDSLEY: That's Burgundy winemaker Michael Baum, who exports a third of his premium Chateau de Pommard wine to the U.S.
BAUM: We have holiday promotions going on that are launching next week. And to tell customers all of a sudden, oh, there's a 25% increase in the cost of the wine you've already ordered that's being shipped to the U.S., no, that just doesn't work.
BEARDSLEY: Baum, who's a former Silicon Valley tech entrepreneur, says he's absorbing the price increase for now because he can afford to. But it's the U.S. retailers of European foods and wines that will be hurt if their customers refuse to pay the higher prices. The makers of European specialty products facing potential market loss due to the higher prices are worried and angry.
Graeme Littlejohn is director of communications for the Scotch Whisky Association.
GRAEME LITTLEJOHN: We feel it's really unjust because, of course, you know, the Scotch whisky industry and the other products which will be impacted by this have nothing to do with the wider U.S.-EU trade disputes on Airbus-Boeing or the steel and aluminum tariffs, either. But yet we are having to foot the bill for these trade disputes.
BEARDSLEY: Littlejohn is referring to last year's trans-Atlantic trade dispute over President Trump's tariffs on European steel and aluminum. The EU responded with a 25% tariff on American bourbon. And Littlejohn says U.S. bourbon sales have plummeted in Europe.
LITTLEJOHN: Nobody wins in these trade wars, but it is certain that the economies of both the U.S. and the U.K., particularly rural Scotland, will be damaged by these tariffs.
BEARDSLEY: French Finance Minister Bruno Le Maire called Trump's latest round of tariffs an aggressive gesture from an ally and an economic and political error. Next year, there will be a second part to the WTO ruling that's expected to favor the E.U. and Airbus. Luxembourg lawmaker Christophe Hansen told the European Parliament the U.S. is making a mistake.
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CHRISTOPHE HANSEN: We respect the WTO ruling, but we regret the U.S. decision to choose tariffs over talks, especially in the light of the Boeing ruling expected for early 2020. It makes no sense for our farmers, companies and workers to foot the bill for a dispute over aircraft subsidies.
BEARDSLEY: European Trade Minister Cecilia Malmstrom says the EU and the U.S. have both subsidized their plane-makers and have a joint responsibility to negotiate a balanced settlement. She warned the new U.S. tariffs will leave Europeans no choice but to respond with their own harsh sanctions against American products next year. Eleanor Beardsley, NPR News, Burgundy, France.
(SOUNDBITE OF QUATUOR MANFRED'S "FAURE: QUATUOR A CORDES EN MI MINEUR, OP. 121: III. FINALE. ALLEGRO") Transcript provided by NPR, Copyright NPR.