Let's Not Forget About the 25%

            Those in both the business and pleasure of wine heaved a sigh of relief when President Trump appeared to step back from proposed 100% tariffs on specialty French products including wine. Outrage had been pouring from every corner of the industry. Predictably, importers spoke up: much of their portfolio comes from France, and the collapse of American demand due to tariff prices would completely upend their business model. American wineries cannot simply replace the French volume; they cannot produce an exponentially larger amount of wine at a moment’s notice. Importers would have to spend precious time and money sourcing new wines, which still may not even satisfy retailer and consumer wants. Perhaps to Mr. Trump’s surprise, American winemakers also expressed alarm: because of the three-tier system, their financial health and economic viability is closely tied to that of the distributors who place their products in restaurants, stores, and consumers’ hands. Financial distress for the distributors translates to pain and frustration for American wineries. Restaurants, too, began to panic: the industry is notorious for its low margins, often only in the black due to alcohol sales. Increased cost of wine would at the very least require cost-cutting elsewhere – sacrificing quality of food, and likely laying off hardworking American employees – but would very probably also lead to closures. In the words of Jason Haas, General Manager of Sonoma County’s Tablas Creek Vineyards, “the disruption of 100% tariffs on wines from the world’s oldest wine regions would have cascading impacts that would reach deep into a whole network of American businesses, investors, and consumers.”

            So, yes, the industry has – for now – dodged a near-disastrous policy. But in celebrating this victory, some overlook the 25% tariff on select EU goods (including wine, cheese, whiskey, and olive oil) that went into place in October of 2019 and still exists. Importers are suffering from these tariffs: many were forced to absorb the added cost, trimming their margins further in a way that benefits only the government and those using importers’ livelihoods as political capital.

https://vinepair.com/articles/european-tariffs-affect-american-wine/

https://tablascreek.typepad.com/tablas/2019/12/no-100-tariffs-on-european-wines-wont-be-good-for-california-wineries.html

https://vinepair.com/booze-news/french-wine-tariffs-update/