New Tariffs Mean Americans Will Have to Pay Up for French Wines

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Enjoy that French champagne now because it’s about to get more expensive.

A World Trade Organization ruling earlier this month gave a green light to the U.S. to impose $7.5 billion in tariffs on European Union products. Among the victims are some agricultural products including wines from France, Spain, Germany and the U.K.

The 25% tax on the wines will mean U.S. retail price hikes of as much as 15%, according to Rabobank analysts including Stephen Rannekleiv, global strategist for beverages.

The price increases are “definitely significant enough to encourage some buyers to consider other options,” according to the report, although ultimately the wines only represent 13% of total volumes consumed in the U.S. Domestic wines could benefit from consumers looking for lower prices, and also Italian wines, which escaped the tariffs.

Ultimately, affected exporters may increase the alcohol content of their products to avoid the tariffs, or reassess their business models to consider shipping in bulk and bottling abroad, the report said.

Trade wars between the U.S. and other nations in the past two years have been contributing to volatility in agricultural commodity and retail food prices, as well as shifting well-worn global trade patterns. Chinese tariffs on U.S. soybeans and Mexican tariffs on pork have contributed to gluts in the U.S., and the tensions have affected everything from cheese to tomatoes.

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