After the Pandemic, Is New Import Duty on US Wine Set to Further Cripple UK’s Hospitality Sector

By Kunal Sawhney, CEO of Kalkine (www.kalkine.co.uk)

Soon, chocolates, wine, and lobsters coming from the US into Britain could see new tariffs as part of the British government’s proposals to set the tariff balance right in the backdrop of a trade conflict around steel and aluminium.

Former US president Donald Trump administration had in 2018 slapped 10 per cent and 25 per cent tariffs on aluminium and steel, respectively, from the EU, due to national security concerns. Brussels retaliated with duties on tobacco, whiskey, and motorcycles.

After its formal exit from the union, these became a part of UK’s independent new tariff system. However, the country is now undertaking a review of the tariff lists to protect UK’s specific interests.

UK’S RETALIATION

Now the officials are discussing which US product should be targeted to counter the US levies. According to the UK’s customs data, it import- ed chocolates worth around £31 million and £224 million worth of wine from the US.Wheat, grapes, and orange juice are also being considered a part of the new tariff basket. Presently, the amount of lobsters UK imports from the US is more than what it exports.These proposals would now be consulted upon publicly to help the government to formulate strategies for the de-escalation of trade tensions.

The trade ministry in a statement has said that the announcements would help in ensuring that the measures are tailored to suit the requirements of the UK economy and to protect all its industries, including aluminium and steel manufacturers.

Trade secretary Liz Truss stressed the intentions to de-escalate the tensions, but the proposals could be a hindrance to the process. As the US voted in Joe Biden’s administration, Britain has already used its new independence from the common EU tariff policy to exert more eco-nomic and diplomatic pressure.Truss last week opened applications for the programme to suspend tariffs that she said would help bring down the costs for manufacturers.

WILL THE UK FOOD AND BEVERAGES SECTOR BE AFFECTED?

The latest sets of announcements widen the scope of the ongoing trade tensions from heavy industry to the food and beverages industry. There is no clarity yet on whether wines like Oregon Pinot Noir or California Chardonnay would also be on the list of wines that would be seeing revised tariffs.

As part of its rebalancing measures, UK has also chosen to continue with a 25 per cent tariff that both EU and UK had imposed on American bourbon and whiskey imports.The pandemic has had a devastating impact on Britain’s food and beverages sector and the overall hospitality industry.

Three national lockdowns and social distancing norms have spelt doom for the sector. England has reopened gradually after a successful vaccination roll-out, and this could be the industry’s only chance at a turnaround.

Given the rough year it has gone through, the government’s efforts should be directed now to support businesses in the sector and protect as many jobs as possible.

The tariffs already imposed on beverages and the ones that are being considered could impact players from the hospitality sector because of the interconnected nature of portfolios of global spirit and wine businesses. It is important that to safeguard other industries, punitive tariffs should not be slapped on products beyond the sectors that are in dis- pute.Tariffs on beverages also impact Britain’s investment, and marketing opportunities and it would be in the UK’s favour if spirits and wines are not subjected to tariff wars.