This good news won't extend far to consumers, except in an oblique manner. It's very unlikely that wines on store shelves will get cheaper, but this move might stave off price increases in the near future.
"I think there will be minimal impact because much of the tariff burden was absorbed by businesses up and down the supply chain," Mike Veseth, who blogs as The Wine Economist, told Wine-Searcher. "They will receive lump sum compensation that may have minimal impact on pricing and sales decisions going forward."
However, with President Donald Trump's entire misadventure in trying to rewrite US trade law on the fly shot down by the US Supreme Court, it will take a lot longer for his administration to impose permanent new tariffs on European products. And it's possible that wine might escape new tariffs entirely.
But today, the only celebrating is being done quietly in the offices of various importers, especially those who ate some of the tariff hit in the first place to keep shelf prices the same.
And when I say quietly, I mean it. I reached out to a lot of wine importers today. None of them want to talk about it.
"Paying those tariffs blew a giant hole in their profit-loss statements, and so recapturing those duty payments is really going to be about making their businesses whole," Jackson Wood, director of industry strategy for Descartes’ Global Trade Intelligence business unit, told USA Today. “It's unlikely to bring much relief to the US consumer any time soon."
I will point out one good thing to wine lovers: at least a more stable tariff situation should mean that you don't have to worry about timing your purchases.
Cluster Hooked: Wine's Stem Cells
Still A 10-percent tariff
In February, the US Supreme Court ruled that the Trump administration could not use an obscure 1977 trade law (IEEPA) to slap tariffs willy-nilly on countries based on Trump's whims.
Trump has other laws he can use to impose tariffs, as he did in his first term. But all of these laws come with more limitations than IEEPA.
In February, the administration used section 122 of the Trade Act of 1974 to impose 10 percent tariffs on nearly every product imported into the United States. Section 122 allows a president to do this to address large trade imbalances, but these tariffs can last only 150 days. The current 10 percent tariffs will expire in July.
The administration has also started an investigation into trade imbalances under Section 301 of the same act. If US Trade Representative Jamieson Greer ultimately finds that other countries have used unfair trade practices against the US, Greer can impose tariffs on a range of goods. Section 301 tariffs are very durable, approved by the courts, and difficult to overturn, even with a change in presidents.
Greer has already announced Section 301 investigations into the European Union as well as Mexico, Japan and at least 12 other countries.
But there's more than one major catch. First, Section 301 tariffs require hearings and public comment, and that takes months.
Second, Greer's ultimate findings, and remedies, must be extremely specific: that the EU (for example) illegally supported a certain dollar amount of products, and thus the US can impose tariffs on exactly that amount. The tariffed products must also be specified.
So, for example, if Greer finds that France should be whacked with $50 million in tariffs, he has to choose specific French products to make up that $50 million. It could be wine ... but it could also be watches, perfume or handbags.
Unlike in the first Trump administration, when tariffs on wine caught wine retailers and restaurateurs by surprise, the US Wine Trade Alliance has been organizing for years now with a message that tariffs on European wine hurt US businesses most. The USWTA claims that for every dollar sent to the EU for wine, US businesses make $4.52 in revenue because US importers, distributors and restaurateurs all get to add markup. We won't know if that message has resonated until it comes time to choose the products to tariff. But it's an appealing message to a president who does care about the restaurant business.
Who gets refunds?
US Customs and Border Patrol opened a web page Monday where importers can apply for tariff refunds. But the process is opaque and the Trump administration has said it may be months before refunds can be processed. The administration says that more than 330,000 separate importers have paid IEEPA tariffs that must be refunded by court order.
More than 3000 businesses, including some heavyweights like Costco and FedEx, have sued the Trump administration to get their money back, so add legal fees to the government's ongoing expense.
The Cato Institute estimates that interest charges alone are costing the US government $22 million per day. That's a powerful incentive to get those refunds out. Importers can only hope for some good news in their bank accounts soon.
