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U.S. wine tariffs hold steady, but future changes could still impact Columbia restaurants

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Lula Drake

Lula Drake wins Best New Bar or Club. Photo by John Carlos

On Friday, the Office of the United States Trade Representative renewed 25 percent tariffs on certain European wines, a mild victory for local restaurants amid fears of them expanding. 

"[I felt] great relief," Tim Gardner, owner of the Main Street wine bar Lula Drake, tells Free Times. "Everyone was really excited to hear that it was going to be at least delayed. Hopefully it won’t come back to haunt us." 

The wine industry has been caught in the crossfire of a trade dispute between the United States and the European Union, with fears it could escalate dramatically. The spat's resulting tariffs launched in October and raised concerns ranging from a loss of American wine jobs, retaliatory tariffs and hits to local restaurants and retailers. 

Industry players launched a lobbying effort against them, including a letter writing campaign, says Harry Root, owner of Grassroots Wine in Charleston and a leader in the push against the tariffs. That campaign eventually included about 150 legislators, including several from South Carolina, that wrote in support of the wine industry. 

On Friday, the U.S. announced it increased duties on civilian aircraft from 10 percent to 15 percent, but left the wine industry untouched. The 25 percent tariffs on wines from France, Germany, Spain and the United Kingdom remained in place with no hike. 

"We definitely declared victory there, but you know there’s a long way to go," Root says. "The 25 percent tariffs as they exist right now are obviously not ideal."

For the most part, the tariffs have been slow to impact the industry, but are starting to be felt after almost five months in effect. Root says about 50 percent of his stock is affected by the tariffs and Gardner recently received notice that one of his distributors would be increasing costs. 

"Right now, at this point, I am absorbing [cost increases,] I am doing my best to keep from passing it on to our customers," Gardner says. "At some point though, you kind of reach a breaking point where those costs have to be passed on."

The 25 percent tariffs stem from U.S. concerns over EU subsidies to aerospace company Airbus. A separate trade spat involving French taxes on large technology companies — mainly American ones — also complicates the situation. 

That digital tax has been put on hold for now, with U.S. President Donald Trump and French President Emmanuel Macron agreeing to negotiate in January, says William Hauck, an associate professor at the University of South Carolina’s department of economics. Hauck explains that the digital tax is where the 100 percent tariffs would have stemmed from. 

He details that countries from the Organisation for Economic Co-operation and Development — of which the U.S. and France are members — are attempting to reach an agreement on the digital taxes. But if an agreement isn't reached by the end of the year, France could move forward with their own version of the tax, which could incite retaliatory tariffs from the U.S, Hauck says.

As for the 25 percent tariff's future? It's expected to be be reviewed again in 180 days. At that point, the trade office's option to expand, increase or otherwise change the tariff will be on the table again.  

"There could be further tariffs if the U.S. doesn’t think that the EU is complying. More wine tariffs could be on the table as part of that sanctions review," Hauck predicts. 

David Clarey joined Free Times in November 2019 as a food and news writer. He's constantly fighting competing desires to try cooking food at home and spending his entire paycheck on Columbia restaurants.

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