Wine investor Tom Gearing was intrigued by a French vintner’s offer of a 2019 Cabernet-Merlot blend rich with aromas of cinnamon and jasmine and what the vintner called “a dazzling expression of the estate’s terroir.”
Even more alluring was its alcohol content: 14.02%.
That two-hundredths of 1% meant Mr. Gearing could sell the big red from Château Cos d’Estournel in Bordeaux to Americans for the vintner’s recommended $153 price instead of $191. That’s because of a quirk in U.S. tariff code that has sent high-alcohol European wine exports soaring.
Washington put 25% tariffs on wine from France, Spain, Germany and the U.K. in October 2019 in retaliation for subsidies they made to European aircraft manufacturer Airbus SE , arguing they hurt Boeing Co. But it applied only to wine with alcohol content of 14% or less.
What followed was a textbook lesson in tariff economics. Before, America imported about $150 million a year in European wine that exceeded 14% alcohol, Commerce Department data show. In the 12 months since the tariff took effect, that rose to $434 million.
